4. Demand shifters Aa Aa The following graph shows the market demand for new hom

Question

4. Demand shifters Aa Aa The following graph shows the market demand for new homes in a local community. Suppose that the town recently made it onto the "top places to live" category in several lifestyle magazines. The positive press causes the town's population to increase sharply. Show the impact of the positive press coverage by shifting the demand curve on the graph Tool tip: Click and drag the curve. The curve will snap into position, so if you try to move the curve and it snaps back to its original position, just try again and drag it a little farther. PRICE IDollars per homel Demand QUANTITY DEMANDED (Homes) good. Suppose that a deep economic The folilowing graph shows the market demand for tinned meat, which is an inferior good. Suppose that a deep recession causes consumer income to decine. Show the impact of the decrease in income by shiting the demand curve on the graph 0 6 8 3 4

Explanation / Answer

1) When a town tops the list for a favourable place to live, the demand for housing in that area increases. Demand for housing shifts to the right.

2) Whe a good is inferior and income falls, people buy more of it. Hence, Demand for tinned meat shifts to the right.

3) When the price of a complement, here cake, falls, its demand rises and with that the demand for ice cream rises. Demand for ice cream shifts to the right.

4) When the price of coffee is going to increas in near future, the demand for coffee will increase today itself since people want to buy more of it in advance when it is cheap. Demand for coffee shifts to the right.

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