Attempts: Keep the Highest: /8 7. A demand puzzle The following calculator shows
ID: 1139381 • Letter: A
Question
Attempts: Keep the Highest: /8 7. A demand puzzle The following calculator shows the demand curve for uff, a useful commodity produced on the planet Hermes. The Hermetian currency is the yen. The calculator also shows how demand for uff is affected by changes in the average income of Hermetians, as well as the prices of tulg and snick, two other related goods available on the planet. At any time in this problem, you may click the Reset to Initial Values button to return the demand curve to its original position. You will not be scored on any changes to the calculator; it's just here to help you answer the questions that follow. Tool tip: Use your mouse to drag the green line on the graph. The values in the boxes on the right side of the calculator will change accordingly. You can also directly change the values in the boxes with the white background by clicking in the box and typing. When you click the Calculate button, the graph and any related values will change accordingly. CALCULATOR Price of Uff (Yen per gram Quantity Demanded PRICE IYen per gram 50 100 (Grams per month 60 DEMAND SHIFTERS 50 -Explanation / Answer
Suppose that the price of a gram of uff increased from 50 yen to 5 yen. This would cause a movement along the demand curve and therefore, a decrease in quantity demanded from 100 to 90 grams of uff .
An increase in average income causes a rightward shift in the demand curve ; therefore, we may conclude that uff is a normal good because as income increases ,demand for that good also increases.
Suppose that the price of tulg or snick change, there is a shift of the demand curve for uff. The directions of these changes imply that snick and uff are complements because demand for uff decreases as price of snick increases and that tulg and uff are substitutes because demand for uff increases as price of tulg increases .For example, Hermetian say, I went to eat my uff this morning, but there wasn't any snick in my fridge .So instead of having uff for breakfast , I ate some tulg.
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