Answer to Question #230092 in Microeconomics for Chwe

Question

Use diagrams to illustrate the impact of each of the following on the demand curve and the equilibrium price and quantity of saskobtead

An increase in consumers' taste for fat cakes

Answer 1

Solution:

An increase in consumer’s taste for fat cakes will lead to an increase in the consumer’s demand for sasko bread. The demand curve will shift to the right resulting in an increase in equilibrium price and the equilibrium quantity for sasko bread. The equilibrium point E₀ will shift to a new equilibrium point E₁.

 

This is displayed by the below graph: