ECONOMICS
DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Fewer children in the population
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News that insects have destroyed much of the peanut crop and that there will be less peanut butter on the shelves in three months.
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A big increase in the price of jelly.
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A report from the Surgeon General of the United States that eating peanut butter makes people nutty.
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Detailed explanation-1: -Answer and Explanation: b. News that insects have destroyed much of the peanut crop and that there will be less peanut butter on the shelves in three months will lead to an increase in demand as people will keep peanut butter for the future.
Detailed explanation-2: -When the consumer’s income increases, the product’s demand increases, especially when the goods are normal. Normal goods are those kinds of goods whose demand increases as consumer income increases. When income increases, the consumer will demand to buy more peanut butter due to the consumer’s purchasing power.
Detailed explanation-3: -Answer and Explanation: This option is correct because an increase in the price of peanut butter causes a decrease in the quantity demanded of peanut butter. It means the demand curve for peanut butter remains the same.
Detailed explanation-4: -According to the law of demand, price and quantity demand has a negative or inverse relationship, in case of a normal good. If the price of peanut butter increases, people will be discouraged to demand more as it is expensive now and reduce their quantity demanded of peanut butter.
Detailed explanation-5: -What will happen to the demand or quantity demanded for jelly if the price of peanut butter increases? Answer: The demand curve for jelly will shift to the left (decrease). Since you would buy less peanut butter when its price increases, you will also buy less jelly (since they are complements).