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Post by Starshine on Apr 26, 2011 22:44:43 GMT -5
I've been working on an assignment for my micro class. Anyway there's one part that's been confusing me a little.
Basically I have to design a basic graph (no numbers required) depicting movement in demand and supply for an inferior good based on certain things happening. One part states "consumer preference decreases and the price of a complement [in consumption] increases."
Would I be right in assuming that both points would only affect the demand curve?
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Post by Red Impact on Apr 26, 2011 23:16:04 GMT -5
In the short run, yes, it'd effect the demand curve exclusively, both situations decreasing demand.
In the long run, they'd reach a new equilibrium, so supply would alter to meet the new demand.
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Post by emoney3265 on Apr 26, 2011 23:20:08 GMT -5
The demand curve would move to the left and that's it I think.
I hate economics.
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Post by Starshine on Apr 26, 2011 23:20:42 GMT -5
Thanks, all.
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