The determinants of the
Answer to Problem 1CQQ
Option ‘b’ is the correct answer.
Explanation of Solution
Option (b):
A change in price of hamburgers leads to a movement along the demand curve and not a shift of the demand curve because price is measured on the vertical axis of a demand curve. Thus, option ‘b’ is correct.
Option (a):
Hot dogs can be considered as substitutes of hamburgers. A change in the price of a substitute good shifts the demand curve of a good. Thus, a change in price of hot dogs shifts the demand curve of hamburgers. So, option ‘a’ is incorrect.
Option (c):
Hamburger buns can be considered as complementary goods of hamburgers. A change in the price of a complementary good shifts the demand curve of a good. Thus, a change in the price of hamburger buns shifts the demand curve of a hamburger. So, option ‘c’ is incorrect.
Option (d):
A change in the income of a consumer of a good shifts the demand curve of that good. Thus, a change in the income of hamburger consumers shifts the demand curve of hamburger. So, option ‘d’ is incorrect.
Concept introduction:
Complementary good: It is a good with a negative cross elasticity of demand, that is, a good whose demand is increased when the price of another good is decreased.
Substitute good: It is a good with a positive cross elasticity of demand, that is, a good whose demand is decreased when the price of another good is decreased.
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