Question:
Which one of the change in the following factors causes the market demand curve for a good to remain unchanged?
(1) Population
(2) Price of that good
(3) Price of a substitute good
(4) Price of a complementary good
(5) Average income of households
Correct Answer:
(2)
Answer Explanation:
Factors 1, 3, 4, and 5 are non-price determinants of demand; changes in them will shift the entire demand curve. A change in the “price of that good” itself only causes a change in the quantity demanded, represented graphically as a movement along the stationary demand curve.
Topic: Demand Theory Year: 2017
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