Question

Buyers in the market for cds learn of an increase in the price of cds results...

Buyers in the market for cds learn of an increase in the price of cds results in what shift in demand?
A. Remains unchanged
B. Shifts to the right
C. Shifts to the left
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Answer #1

An increase in the price of the CDs will not shift the demand curve at all. It will cause movement along the demand curve.

The answer to this question is "A".

A shift in the demand curve occurs only when the demand for the product change without any change in the price. For example, if the price of the substitute of CDs changed that will shift the demand curve i.e. people will demand a different amount at the current price. But a change in the price will only change the quantity demanded and cause movement along the demand curve.

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