Question

Skippy loves peanut butter. Skippy reads on the internet that 75 percent of the peanut crop in the South has been wiped out by drought, and that this will cause the price of peanuts to more than double by the end of the year. As a result,

a. ​ Skippy’s demand for peanut butter decreases as he considers buying almond butter.

b. ​ Skippy’s demand for peanut butter will increase, but not until the end of the year.

c. ​ Skippy’s demand for peanut butter shifts left today.

d. ​ Skippy’s demand for peanut butter increases today.

Answer 1

d. ​ Skippy’s demand for peanut butter increases today.

Step-by-step explanation:

The taste and preferences of the consumers are one of the factors affecting the demand for the goods. The demand for goods increases according to tastes and preferences. Another factor of an increase in demand is the expectation of a consumer regarding the future prices of the goods.

In the given scenario, Skippy's demand for the peanut butter will increase because of the above mentioned two reasons. Since he is very much fond of the peanut butter, the demand will remain constant. At the same time, after reading about the future unavailability of the peanut butter and the increase in the price of it, the demand for the peanut butter will rise the present day.