Chapter 5: Problem 7

Each of the following may lead to a change in the demand for product A except __________. (LO2) a) a change in the price of product \(\mathrm{A}\) b) a change in people's taste for product \(A\) c) a change in people's incomes d) a change in the price of product B (a substitute for product A)

Short Answer

Expert verified

The correct answer is option a) A change in the price of product A, as it directly affects the quantity demanded, not the demand itself. The demand curve remains unchanged, and only the position along the demand curve changes as a result of price change.

Step by step solution

Option a) A change in the price of product A

A change in the price of product A directly affects its demand. Higher prices will lead to a decrease in demand, whereas lower prices will lead to an increase in demand.

Option b) A change in people's taste for product A

If people's taste for product A changes, it can lead to a change in its demand. For example, if consumers suddenly start to prefer a different product, the demand for product A will decrease.

Option c) A change in people's incomes

An increase in people's incomes will make them more capable of buying product A, leading to an increase in its demand. Conversely, a decrease in people's incomes will lead to a decrease in demand for product A.

Option d) A change in the price of product B (a substitute for product A)

A change in the price of product B, a substitute for product A, can also lead to a change in the demand for product A. If the price of product B increases, people might shift their consumption to product A, leading to an increase in its demand. Conversely, if the price of product B decreases, people might shift their consumption to product B, leading to a decrease in demand for product A.

Conclusion

Based on the analysis, it is clear that option a) A change in the price of product A does not lead to a change in the demand for product A. Instead, a change in price directly affects the quantity demanded, not demand itself. The demand curve remains unchanged, and only the position along the demand curve changes as a result of price change. Therefore, the correct answer is option a.