2. Demand Shifts. Review the determinants of demand and then predict how each of

Question

2. Demand Shifts. Review the determinants of demand and then predict how each of the following events would likely affect the demand for breakfast burritos in Albuquerque. Careful- I'm asking what happens to the demand curve (D), not just the quantity demanded. Average incomes in Abq fall. The price of breakfast burritos goes up. The price of an Egg McMuffin falls. The price of a complementary product rises. What's a complement to breakfast burritos? a. b. c. d. c. The population of Albuquerque rises f. Are you sure about a? What did you assume in order to answer a?

Explanation / Answer

Answer

a) Assuming Burritos a normal good decrease in average income will reselu in decrease in demand and Demand Curve will shift to the Left.

b) If Price of burritos rises then quantity demanded decrease and there upward movement along demand curve.(Note whenever there is change in own price then quantity demanded changes and there is movement along demand curve.

c) We can treat Egg Mc Muffin as a substitute to burritos, hence fall in price of egg mcmuffin will result in decrease in demand aor Burritos and Demand will shift to the Left.

d) A rise in price of complementary good will result in decrease in demand aor Burritos and Demand will shift to the Left.

e) If population of Albequerque rises. then ther will be more demand and hence Demand Curve will shift to the Left.

f) In part (a) assumption is made regarding type of good. I have assume that good is a normal good. But by any chance If Burritos is an inferior good then fall in average income will result in increase in demand and demand curve will shift to the right.

Related Questions

Navigate

• Browse (All)
• Browse 2
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.