Friday, January 25, 2013

Demand | What Else is Needed to Change the Demand?

Since a change only in the price of a good does not change the demand for that good, what else is needed to change the demand?




















Your Answer:
For the demand of a good to change, consumers must be willing to pay higher prices for any quantities of a good than was previously the case, or they decide that they will only pay lower prices for any quantities of a good than was previously the case. 

Changes in attitudes toward the good or toward a compliment or substitute good must change to reflect a wholesale change in demand.

Source: Heyne, Boettke, and Prychitko, The Economic Way of Thinking, 11/e, Pearson

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