Question

Harry loves both hot dogs and hamburgers. He receives about the same satisfaction from eating one hamburger as he does from eating one hot dog, and the two goods fill the same need in Harry's life. The price of hot dogs has been extremely volatile for the past several years, and this year is no exception Hot dog prices decreased tremendously this month Assuming hot dogs and hamburgers are substitutes for Harry, what is the effect on Harry's demand for hamburgers due to the decrease in the price of hot dogs? O A. There will be a movement down along his demand curve O B. There will be a movement up along his demand curve. O C. His demand curve for hamburgers will shift to the left. O D. His demand curve for hamburgers will shift to the right.

Answer 1

Option C

Due to the decrease in decrease in price of the prices of hot dogs, the demand for hot dogs will increase. Since this is a substitute for hamburgers, the demand for hamburgers will drop. This will lead to a shift in the demand curve since the demand has declined to change in consumer preferences.

Movement along the curve happens due to changes in price which is not the case here. Demand curve shifting to the right implies overall increase in the demand.