Demand Curves, Movements Along Demand Curves and Shifts in Demand Curves Questions and COMPLETE SOLUTIONS

UNIT

2 Microeconomics LESSON 1 ■ ACTIVITY
9
Demand Curves, Movements Along Demand Curves and
Shifts in Demand Curves
Part A
Figure 9.1 shows the market demand for a hypothetical product: Greebes. Study the data, and plot the
demand for Greebes on the axes in Figure 9.2. Label the demand curve D, and answer the questions that
follow. Write the correct answer in the answer blanks or underline the correct words in parentheses.

Figure 9.1
Demand for Greebes
Price Quantity Demanded
($ per Greebe) (millions of Greebes)
$.10 350
.15 300
.20 250
.25 200
.30 150
.35 100
.40 50

Figure 9.2
Demand for Greebes
.55
.50
PRICE PER GREEBE




.45
.40
.35
.30
.25
.20
.15
.10
.05
0
50 100 150 200 250 300 350 400
QUANTITY (millions of Greebes)
The data for demand curve D indicate that at a price of $0.30 per Greebe, buyers would be willing
to buy 150 million Greebes. Other things constant, if the price of Greebes increased to $0.40 per
Greebe, buyers would be willing to buy 50 million Greebes. Such a change would be a decrease in
(demand / quantity demanded). Other things constant, if the price of Greebes decreased to $0.20,
buyers would be willing to buy 250 million Greebes. Such a change would be called an increase in
(demand / quantity demanded).
Adapted from Phillip Saunders, Introduction to Microeconomics: Student Workbook, 18th ed. (Bloomington, Ind.,
1998). Copyright © 1998 Phillip Saunders. All rights reserved.

Advanced Placement Economics Microeconomics: Student Activities © National Council on Economic Education, New York, N.Y. 1
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, UNIT

2 Microeconomics LESSON 1 ■ ACTIVITY 9 (continued)


Now, let’s suppose there is a dramatic change in federal income-tax rates that affects the
disposable income of Greebe buyers. This change in the ceteris paribus (all else being equal)
conditions underly- ing the original demand for Greebes will result in a new set of data, shown in
Figure 9.3. Study these new data, and add the new demand curve for Greebes to the axes in Figure
9.2. Label the new demand curve D1 and answer the questions that follow.

Figure 9.3
New Demand for Greebes
Price Quantity Demanded
($ per Greebe) (millions of Greebes)
$.05 300
.10 250
.15 200
.20 150
.25 100
.30 50


Comparing the new demand curve (D1) with the original demand curve (D), we can say that the
change in the demand for Greebes results in a shift of the demand curve to the (left / right).
Such a shift indicates that at each of the possible prices shown, buyers are now willing to buy a
(smaller / larger) quantity; and at each of the possible quantities shown, buyers are willing to offer a
(higher / lower) maximum price. The cause of this demand curve shift was a(n) (increase / decrease)
in tax rates that (increased / decreased) the disposable income of Greebe buyers.
Now, let’s suppose that there is a dramatic change in people’s tastes and preferences for Greebes. This
change in the ceteris paribus conditions underlying the original demand for Greebes will result in a
new set of data, shown in Figure 9.4. Study these new data, and add the new demand curve for
Greebes to the axes in Figure 9.2. Label the new demand curve D2 and answer the questions that
follow.

Figure 9.4
New Demand for Greebes
Price Quantity Demanded
($ per Greebe) (millions of Greebes)
$.20 350
.25 300
.30 250
.35 200
.40 150
.45 100
.50 50

Comparing the new demand curve (D2) with the original demand curve (D), we can say that the
change in the demand for Greebes results in a shift of the demand curve to the (left / right).

2 Advanced Placement Economics Microeconomics: Student Activities © National Council on Economic Education, New York, N.Y.

This study source was downloaded by 1016709 from cliffsnotes.com on 05-16-2025 17:12:01 GMT -05:00


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