Question

4.3 assessment
think critically

1. what would happen to the demand curve for bus tickets if the price of gasoline doubled? which of the determinants of demand would this affect?
2. what would happen to the demand curve for a particular brand of shampoo if a famous movie actress with beautiful hair announces that it is the best shampoo she has ever used? which of the determinants of demand would this affect?
3. what would happen to the demand curve for towel today if a large store announces a 50 - per cent - off sale on towels next week? which of the determinants of demand would this affect?

Explanation:

1. When gasoline prices double, bus tickets become a cheaper alternative for travel. This affects the price of related goods (substitutes), shifting the bus ticket demand curve right.
2. A famous actress endorsing a shampoo brand increases consumer tastes/preferences for that brand, shifting its demand curve right.
3. A 50% off sale on cookware lowers the price of the good itself, which causes a movement along (not a shift of) the demand curve, increasing quantity demanded.

Answer:

1. The demand curve for bus tickets would shift to the right (increase in demand). This is affected by the price of a related good (substitute goods, as gasoline and bus travel are substitutes for transportation).
2. The demand curve for that shampoo brand would shift to the right (increase in demand). This is affected by consumer tastes and preferences (driven by the celebrity endorsement).
3. There would be a downward movement along the current demand curve for cookware (increase in quantity demanded), not a shift of the curve. This is affected by the price of the good itself (the sale reduces the product's own price).