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Which of the following could cause a long-run shift in demand as part of the "guiding...

Which of the following could cause a long-run shift in demand as part of the "guiding function price"? A. a change in tastes and preferences B. an increase in price caused by a shift in supply C. income shift caused by an economic recession D. an increase in number of buyers

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Answer #1

A. A change in tastes and preferences- Change in tastes and preferences occurs only during long run as it cannot happen instantaneously

B. An increase in price caused by a shift in supply- This is a short run case where we assume demand has not changed.If demand decreases and supply also decreases there will not be price change.

C. Income shift caused by an economic recession-Since recession last for years it will cause long run shift in demand.As the income of people decrease the demand will drastically decrease for long durations

D. An increase in number of buyers- Increase in number of buyers typically means increase in demand which is short run.

Therefore the correct options are A and C

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