Chapters Three: “Critical Thinking Questions”
41. We know that a change in the price of a product causes a movement along the demand curve. Suppose consumers believe that prices will be rising in the future. How will that affect demand for the product in the present? Can you show this graphically? If the price of the product, like coffee beans or gasoline, is going to increase in future, what the consumers will do, in the present, is that they will start buying large quantities of the product. This means that the demand curve will shift to the right because the demand or quantity purchased at each price will increase.
42. Suppose there is soda tax to curb obesity. What should a reduction in the soda tax do to the supply of sodas and
41. We know that a change in the price of a product causes a movement along the demand curve. Suppose consumers believe that prices will be rising in the future. How will that affect demand for the product in the present? Can you show this graphically? If the price of the product, like coffee beans or gasoline, is going to increase in future, what the consumers will do, in the present, is that they will start buying large quantities of the product. This means that the demand curve will shift to the right because the demand or quantity purchased at each price will increase.
42. Suppose there is soda tax to curb obesity. What should a reduction in the soda tax do to the supply of sodas and