Question

The following are factors that could possibly Shift Up the current Demand Curve for certain good X, EXCEPT:

Question options:

	An increase in income, assuming x is a normal good.
	An increase in price of a complement for good x.
	An increase in the price of a substitute for good x.
	An expected future increase in price per unit of good x.

Answer 1

Answer: 2^nd option

Suppose cement and brick are building materials and these are complement to each other – both these are required for construction. If the price of cement increases, the demand of cement would decrease and it would decrease the demand of brick too – because brick is no longer required if cement becomes expensive; the construction may be stopped. Therefore, an increasing price of complement can’t shift up the demand curve of good X but it shifts down. 2^nd option is not relevant.

Other options are relevant:

An increasing income would shift the demand curve up, because it increases purchasing capacity.

An increasing price of substitute decreases demand of that substitute and increases demand of other substitute.

Future expectation of increasing price increases demand for today, which shifts the demand curve up.