Question

step 4: possible demand scenarios
for each of the following situations, circle if the demand curve for your cola would shift left or shift right and then indicate a shifter of demand. finally complete a simple graph showing what happens to price

1. buyers of your product get higher paying jobs

r or l shifter:

1. new york city bans all soda drinks from the city. you now cannot sell your product in the city.

r or l shifter:

1. the price of coke products goes down.

r or l shifter:

1. weather reporters say it is going to be a perfectly sunny holiday weekend (good time to have a cookout)

r or l shifter:

1. lebron james decides to endorse your product

r or l shifter:

Explanation:

• Question 6: When buyers get higher - paying jobs, assuming cola is a normal good, the demand for cola will increase. An increase in demand is represented by a right - shift of the demand curve. The shifter is income.
• Question 7: If New York City bans soda drinks, the number of potential buyers in that area is reduced. A decrease in the number of buyers leads to a left - shift of the demand curve. The shifter is the number of buyers.
• Question 8: Coke and the cola in question are likely substitutes. When the price of Coke (a substitute) goes down, consumers will buy more Coke and less of the other cola. This causes a left - shift of the demand curve for the cola. The shifter is the price of a substitute good.
• Question 9: A sunny holiday weekend (good for a cookout) is likely to increase the preference (taste) for cola (as people may consume more during cookouts). An increase in preference leads to a right - shift of the demand curve. The shifter is consumer tastes or preferences.
• Question 10: When LeBron James (a famous athlete) endorses a product, it is likely to increase the preference (taste) for the product among consumers. An increase in preference causes a right - shift of the demand curve. The shifter is consumer tastes or preferences (in this case, influenced by advertising/endorsement).

Answer:

1. R, Shifter: Income
2. L, Shifter: Number of buyers
3. L, Shifter: Price of a substitute good
4. R, Shifter: Consumer tastes or preferences
5. R, Shifter: Consumer tastes or preferences