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Refer to the three demand curves for coffee and assume that coffee is a normal good. Which of the following would shift the demand for coffee from d1 to d2?

1) An increase in the price of tea
2) A decrease in the price of coffee
3) A decrease in consumer income
4) An increase in the price of coffee

User Singhakash
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1 Answer

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Final answer:

An increase in the price of tea, a substitute for coffee, would shift the demand curve for coffee from d₁ to d₂, as consumers would turn to coffee as an alternative.

Step-by-step explanation:

The demand for a normal good, such as coffee, will shift due to various factors. In this scenario, we are considering what would cause the demand curve for coffee to shift from d₁ to d₂. An increase in the price of tea, which is a substitute for coffee, would cause consumers to buy more coffee instead of tea, thus shifting the demand curve for coffee to the right, from d₁ to d₂. This shift is a response to a change in the relative price of the substitute, not a change in the price of the coffee itself.

Therefore, the correct answer to what would shift the demand for coffee from d₁ to d₂ is option 1). Options 2), 3), and 4) are incorrect because they relate to the price of coffee or consumer income, which are not correct in the context of the question.

User Theringostarrs
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