Examkin

Question

Difficulty: MediumDeterminants and Changes in Demand

A sudden increase in the market price of beef causes many household consumers to switch to purchasing fish as an alternative source of protein. Which of the following best describes the resulting effect on the demand curve for fish?

  1. A rightward shift of the demand curveAnswer
  2. B
    An upward movement along the demand curve
  3. C
    A leftward shift of the demand curve
  4. D
    A downward movement along the demand curve

Answer

A rightward shift of the demand curve
Beef and fish are competitive goods (substitutes). An increase in the price of beef causes consumers to seek alternative protein sources, thereby increasing the demand for fish at every price level. Because this change is driven by a non-price factor (the price of a related commodity), it causes an outward (rightward) shift of the entire demand curve for fish.

Step-by-Step Solution

1
Identify the economic relationship between beef and fish
Beef and fish serve as alternative protein sources, making them competitive demand items (substitutes).
Understanding whether goods are substitutes or complements determines the direction of the demand change.
2
Analyze the impact of a price increase in beef on the demand for fish
When the price of beef rises, consumers reduce their beef consumption and increase their demand for fish at any given price.
An increase in the price of a substitute commodity increases the demand for the alternative commodity.
3
Determine the geometric effect on the demand curve for fish
Since the change is driven by a non-price factor of fish (the price of a related good), it causes an outward (rightward) shift of the entire demand curve.
Changes in non-price determinants shift the demand curve, whereas changes in own price cause movement along the curve.

Key Concept

Impact of substitute goods' prices on demand curve shifts
Estimated Time:1m 0s
Rate this question

Topics

Determinants and Changes in Demand

More questions from this topic