Answer to Question #324231 in Microeconomics for Ayesha

Question

Q 3: identify whether the demand curve will shift leftward or rightward.

a) An increase in income (the good under consideration is an inferior good)

b) A rise in the price of a complementary good

c) A fall in the price of a substitute good

 d) A rise in the number of buyers

Answer 1

1. For inferior goods increase in consumers income results to decrease in their demand and thus demand curve shift to the left.
2. Complementary goods are those that are used together.A rise in price of a complementary good decreases the demand of it other complements and thus the demand curve shifts to the left.
3. A substitute goods are those goods that serve the same function but are different.A fall in price of the substitute good to the commodity in question results to decrease in it's demand and thus shift to the left.
4. A rise in number of buyers increases the quantity demanded and thus the demand curve shifts to the right.