Chapter 2R, Problem 3MCQ

To determine

The question requires us to identify the factor which causes the demand for lemons to fall.

Explanation of Solution

All the options except ‘an increase in the price of lemons’ cause the demand for lemons to change. While an increase in the price of lemons will increase the quantity demanded. 

The only change in the price of the lemons will cause the quantity demanded lemons to change. Thus, an increase in the price of lemons will lower the quantity demanded of lemons. 

So, option “a” or “an increase in the price of lemons” is the correct option.

Economics Concept Introduction

The demand for a commodity will change due to the following reasons:

• Change in price of relative goods (substitutes and complementary products) 
• Change in taste and preferences 
• Change in peoples’ income level 
• Change in expectations
• Change in the number of consumers

Any change in the price of the commodity changes the quantity demanded.