Question

The demand curve for a product shifts to the right. Which of the following statement(s) is/are plausible explanation(s) for this situation?

a. The price of a competing product decreased

b. A successful television advertising campaign was launched by the manufacturer of the product

c. Assuming the commodity in question is a normal good, the income available to the consumer increased

d. b and c

Answer 1

Ans) The demand curve shifts right when demand of a product increases.

• When price of competing product decreases, people will prefer buying that product and hence demand for the product in question will decrease. For eg- you sell fanta and the price of coca cola decreases, therefore people will prefer buying coca cola, as result, demand for fanta will decrease and the demand curve for fanta will shift to the left.
• A successful television campaign means that the popularity of the product increases and hence the demand for the product will increase leading demand curve to shift right. For eg- suppose there was a brand which was earlier less known to people but after its regular campaigning, it was made familiar to large portion of people, leading to increase in demand. This is correct case.
• When income of consumer increases, the demand for normal good increases, leading the demand curve to shift right. For eg- you love chocolates and it is a normal good, as your income will increase, you will buy more of it. This case is also correct.

So option d is right answer.