Which of the following could cause an increase in the demand for peanut butter?
ID: 2428728 • Letter: W
Question
Which of the following could cause an increase in the demand for peanut butter? Instructions: You may select more than one answer. Click the box with a check mark for correct answers and click to empty the box for the wrong answers. An increase in the expected future price of peanut butter. An increase in consumer incomes (if peanut butter is a normal good) 2An increase in the price of jelly. An increase in the number of buyers in the market. decrease in the price of peanut butter. Which of the following could cause a decrease in the demand for jelly? Instructions: You may select more than one answer. Click the box with a check mark for correct answers and click to empty the box for the wrong answers. A decrease in income, if jelly is an inferior good. An increase in the price of peanut butter (if pesnut butter and jelly are complements) An increase in the price of jelly 2 A decrease in the expected future price of peanut butter A news report that jelly is hazardous.Explanation / Answer
Answer 1 - A decrease in the price of peanut butter,
An increase in consumer incomes (if peanut butter is a normal good), and An increase in the number of buyers in the market.
Reason - primarily a decrease in price will increase the demand for peanut butter as here the law of demand prevails which says, an increase in demand is caused by decrease in price and vice versa.
Secondly in case of normal goods the consumption of a product increases as the income increases.
Lastly, an incrrinc in number of buyers in the market will increase the buying potential of the market which will ultimately increase the demand of peanut butter.
Answer 2 - A news report that jelly is hazardous,
An increase in the price of peanut butter (if peanut butter and jelly are complements), and A decrease in the expected future price of peanut butter.
Reason - primarily a news report that the jelly is hazardous can decrease the demand for the jelly even if the price remains unchanged as there are saveral other factors which effects the demand keeping the price constant and one of them is taste and preference. If the jelly is reported as hazardous it will no more include the demand of consumers as much as before and the demand will fall.
Secondly, complimentary goods are the one which are consumed simultaneously thus the increase in price of one decreases the demand for other good as well and vice versa. So as the peanut butter is considered to be a complimentary good increase in its price will decrease the demand for jelly.
Lastly, the future expectation of decrease in future price of jelly will decrease the current demand for it, because the consumer is expecting the price to fall in future that means he is paying a higher amount today to buy the same jelly which will be available at a lower price in future. So the consumers will postpone the demand today to buy the same at a lower price in future.
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