Question

Which of the following will have the greatest influence on the slope of the demand curve in a single market model?

Group of answer choices

wealth effects

substitute goods

full employment

higher wages

Answer 1

The slope of the demand curve in a single market model is primarily influenced by substitute goods.

When the price of a substitute good increases, consumers are more likely to switch to the original good, resulting in an increase in demand and a steeper slope of the demand curve. Conversely, when the price of a substitute good decreases, consumers are more likely to switch away from the original good, leading to a decrease in demand and a flatter slope of the demand curve.

For example, if the price of coffee increases, consumers may choose to switch to tea as a substitute. This shift in consumer preferences would lead to a decrease in the demand for coffee and a flatter slope of the demand curve for coffee.

While wealth effects, full employment, and higher wages may indirectly impact demand, they do not directly influence the slope of the demand curve in the same way as substitute goods. Wealth effects refer to changes in consumer purchasing power due to changes in income or assets, which can impact overall demand but do not specifically affect the slope of the demand curve. Similarly, full employment and higher wages may increase consumers' ability to purchase goods and services, but they do not directly determine the shape or steepness of the demand curve.

Therefore, in a single market model, substitute goods have the greatest influence on the slope of the demand curve.

I hope this helps you. :)

Answer 2

Answer: Among the group of answer choices provided, the greatest influence on the slope of the demand curve in a single market model is likely to be "substitute goods."

Step-by-step explanation:

• Wealth effects: Changes in wealth can influence demand, but they typically shift the entire demand curve rather than affecting its slope. For example, an increase in wealth might lead to an overall increase in demand for most goods, shifting the demand curve to the right.

• Substitute goods: The availability and prices of substitute goods are a key determinant of the slope of the demand curve. If there are close substitutes available for a particular product, consumers can easily switch to the substitutes when the price of the original product changes. This makes the demand curve relatively elastic (flatter). On the other hand, if there are no or limited substitutes, consumers have less flexibility in their choices, and the demand curve becomes more inelastic (steeper).

• Full employment: Full employment refers to a situation where all available labor resources are being used, and it is generally not a direct factor influencing the slope of the demand curve. It might affect the overall level of demand in the economy, but it is not directly tied to the slope of the demand curve in a single market model.

• Higher wages: Higher wages can affect consumers' purchasing power and overall demand in the economy, but they are also not directly related to the slope of the demand curve. An increase in wages might lead to an increase in demand for certain goods or services, but it does not inherently affect the steepness or flatness of the demand curve.

In summary, among the given options, "substitute goods" have the most direct influence on the slope of the demand curve in a single market model. The availability and pricing of substitutes determine how responsive consumers are to changes in the price of a specific good or service.