Question

1. A change in the price of carrots will cause a movement along the demand curve for substitute Vegetables, and a shift in the demand for carrots. True or false?

Answer 1

Answer 1

A movement along demand curve occurs whenever there is change in Price of the own good(i.e. quantity demanded changes).

A Shift in demand curve occurs whenever there is change in factors other than Price of the own good(i.e. Demand Changes).

Hence Change in Price of Carrot will result in movement along demand curve of carrot as discussed above.

As demand of Substitute Vegetable changes due to price of carrot(i.e. Due to factor other than its own price). Hence This will result in shift in demand curve of substitute vegetable.

Hence A change in the price of carrots will cause a Shift demand curve for substitute Vegetables, and movement along the demand for carrots.

Hence The given Statement in FALSE