managerial economics_9 - => Expected future...

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2. What effect will each of the following have on the demand for product B? Please draw a diagram on each one and explain your answer. a. Product B becomes more fashionable. => Increase in consumer preferences for the good => Increase in demand b. The price of substitute product C falls. => Decrease in price of substitute good => Decrease in demand c. Income declines and product B is an inferior good. => Decrease in consumer income level => Decrease in demand d. Consumers anticipate the price of B will be lower in the near future.
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Unformatted text preview: => Expected future price decrease for the good => Decrease in demand e. The price of complementary product D falls. => Decrease in price of complementary good => Increase in demand f. Foreign tariff barriers on product B are eliminated. => Taxes on the good decrease => Increase in demand < Diagram for a, e, f > < Diagram for b, c, d > Increase in Demand Decrease in Demand P P D D' D’ D Q Q...
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