Consider the market in the figure to the right. What happens to the market demand curve if consumer income decreases? Using the line drawing tool, graph the new demand curve with a lower level of income. (Assume the good is a normal good.) Label it D'. Carefully follow the instructions above, and only draw the required object. Price D Quantity

Question 2 (5 marks) No words allowed, only a diagram with annotations To answer this question only a diagram with annotations is required. Suppose apples and pears are substitutes in consumption. An outbreak of Grumpy Granny Smith fungus has a devastating effect on the size of the apple crop. Show on a diagram how this will affect the market for pears. Indicate how the equilibrium price and equilibrium quantity of pears will change. The direction of any changes should be indicated using arrows. S hp Please turn over. FTSE jse 40

Figure 4-6Refer to Figure 4-6.  The movement from D’ to D could be caused by   a. an increase in the price of a complement.   b. a decrease in income, assuming the good is inferior.   c. a decrease in price.   d. buyers expecting the price of the good to fall in the near future.

The following scenarios describe products that are price.... ? 1. The new Mercedes sports car costs over 200,000 dollars 2. Jamal picks a box of corn flakes amongst the many available brands ? 3. Carl buys a large bag of gummy candies for 1 dollar ? A. Elastic B. Inelastic

05- Income and Substitution Effects Question 4

3. If the demand for a product is perfectly price inelastic, what does the corresponding price consumption curve look like? Draw a graph to show the price consumption curve.

Hot dogs and hot dog buns are complimentary goods. Therefore, an increase in the price of hot dogs would cause the demand for hot dog buns to A- decrease. B-stay the same. C-not change. D-increase.

Suppose that a decrease in the price of X results in less of good Y sold. What are X and Y called?    A. substitute goods  B. complementary goods  C. normal goods  D. inferior goods

A change of which of the following will not directly shift the demand curve for Regular Coke?   Question 1 options:   The price of regular Coke   The price of diet Pepsi   The price of diet Coke   The income of the consumer