Question

Use the following demand function, Qx=f (Px, Py, I) where there are no other variables affecting
Qx, and Qx = quantity of good X
Px = price of good X
Py = price of good Y
I = income of consumer

To explain:

1. An increase in the quantity demanded for good X. Illustrate your answer with an appropriate graph.

2. An increase in the demand for good X. Illustrate your answer with an appropriate graph.

Answer 1

Answer on Question#39323 – Economics – Microeconomics

1. An increase in the quantity demanded for good X. Illustrate your answer with an appropriate graph.

A change in quantity demanded caused ONLY by a change in the PRICE of the product. On a graph it is represented by a movement ALONG a SINGLE demand curve.

2. An increase in the demand for good X. Illustrate your answer with an appropriate graph.

An increase in demand will shift the demand curve for a good to the right resulting in a higher equilibrium quantity and a higher equilibrium price in the market.

A shift in the demand curve will be caused by a change in one of the determinants of demand (other than price). These determinants include the level of income, the price of other goods (substitutes and complements), tastes and perhaps factors like advertising. A shift to the right means an increase in demand.