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12) Which one of the following events shifts the demand curve for grape jelly to the right? A) a decrease in the price of strawberry preserves, a substitute for grape jelly B) an increase in the price of peanut butter, a complement of grape jelly C) an increase in income if grape jelly is a normal good D) a decrease in the population E) a decrease in the price of grape jelly

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Beverley Smith
Beverley SmithLv2
6 Jul 2018
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Related questions

The price of peanuts increases. At the same time, we see the price of Jelly rise. How does this affect the market for peanut butter?

A. the demand curve will shift to the left; the supply curve will shift to the left.

B. the demand curve will shift to the left; the supply curve will shift to the right.

C. the demand curve will shift to the right; the supply curve will shift to the left.

D. the demand curve will shift to the right; the supply curve will shift to the right.

I understand that the supply curve shifts to the left, but how does the demand curve shift to the right considering the price of its complement product (Jelly) increased? I've learned that the increase in the price of a complement product makes demand decrease. Could you please explain why the answer is C.?

Carefully explain what is happening in the following markets. Indicate the impact if any on:

1. demand, 2. supply, 3. price, and 4. quantity:

(i) A U.S. car manufacturer has produced a lot of SUVs, but now is having difficulty selling them at the market price.

(ii) The new iPhone sold out on the first day. Hundreds line up outside Apple desperate to get their hands on the new phone.

(iii) In the market for beer, the population of drinking age increases; also brewery unions negotiate a big increase in wages.

(iv) In the market for housing, house prices are expected to increase significantly in the near future.

(v) In the market for peanut butter, there is an increase in the price of jelly. (Peanut butter and Jelly are complements).

(vi) "A Florida man suffered severe burns after his Galaxy Note 7 exploded in his trousers pocket (The Sun Uk edition, 2016). This triggered a recall of the Galaxy Note 7 by Samsung."

Learning Objective: In terms of macroeconomics; Be comfortable with what shifts the supply and demand curve, and how shifts in either supply or demand or both supply and demand change equilibrium quantity and equilibrium price.

You must answer both. Strategy: explain whether each factor changes supply or demand and in what direction.

1. Music compact discs are normal goods. What will happen to the equilibrium price and quantity of music compact discs if musicians accept lower royalties, compact disc players become cheaper, more firms start producing music compact discs, and music lovers experience an increase in income?

2. What would happen to the equilibrium price and quantity of peanut butter if the price of peanuts went up, the price of jelly fell, fewer firms decided to produce peanut butter, and health officials announced that eating peanut butter was good for you?

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