Consider the impact on demand for a specific product in each of the following cases -will...

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Answer 1

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(a) As boycott of sable fur coats is announced so demand for sable fur coats will decline. Sable pelts are used to manufacture sable fur coats which means it is an input in sable fur production. So, as demand for sable fur coats declines, demand for sable pelts will also decline.

(b) Gasoline is used to run motorboats so they are complementary goods that is they are used together. As price of gasoline goes down, demand for gasoline will increase which will increase the demand for motorboats.

(c) Coffee and energy drinks are substitutes. So, as price of coffee goes up, demand for coffee will decline and thereby demand for energy drinks will increase.

(d) According to law of demand, price of a good and its quantity demanded are inversely related to each other. So, as price of coal goes down, demand for coal will increase.

(e) As per capita income increase, demand for college education will increase as more people will be able to afford college education.

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