Question

given an estimated demand function for avocados

of Q = 104 - 40p + 20pt + 0.01Y, show how

the demand curve shifts as per capita income, Y,

increases by $1,000 a year. Illustrate this shift in

Answer 1

$Q=104-40Pt+0.01Y$

When the per capita income changes, the new demand curve will be:

$Q=104-Pt+10Y$

This new shift can be represented as in the diagram above whereby the demand curve shifts from series 1 to series 2.

This is because as the per capita income increases, the consumer's purchasing power expands.