keeping the demand curve you created for susan in mind, analyze how the following situations would affect the quantity demanded or the demand for long - distance phone service.
1. susan receives a pay increase in her campus job.
2. the long - distance service susan subscribes to lowers its price by 15 percent.
3. susan has a fight with her boyfriend.
4. susan receives an inheritance from her aunt.
5. susan gets an e - mail account through the university.
6. the long - distance service susan subscribes to increases its price by 10 percent.
7. susan receives notice that she has been accepted in a summer internship program that will pay her substantially more than her current position.

Question

Accepted Answer

### 1. Susan receives a pay increase in her campus job.
# Brief Explanations:
A pay increase means Susan's income rises. Long - distance phone service is likely a normal good (assuming it's not an inferior good). For normal goods, as income increases, the demand for the good increases. So the demand for long - distance phone service will shift to the right (increase), not a change in quantity demanded (which is a movement along the curve due to price change) but a change in demand (shift of the curve) because income is a non - price determinant.
# Answer:
The demand for long - distance phone service will increase (the demand curve shifts right) because Susan's income has increased, and long - distance phone service is likely a normal good.

### 2. The long - distance service Susan subscribes to lowers its price by 15 percent.
# Brief Explanations:
According to the law of demand, when the price of a good (long - distance phone service here) decreases, ceteris paribus, the quantity demanded of that good increases. This is a movement along the existing demand curve (a change in quantity demanded) because the change is due to the price of the good itself.
# Answer:
The quantity demanded of long - distance phone service will increase. This is a movement down along the demand curve for long - distance phone service because the price of the service (the good) has decreased.

### 3. Susan has a fight with her boyfriend.
# Brief Explanations:
If Susan has a fight with her boyfriend, she may be less likely to want to communicate with him (or others via long - distance if related to the boyfriend situation) or her preferences for using long - distance phone service may change. A change in preferences is a non - price determinant of demand. If she now has less desire to use long - distance phone service (for example, to call her boyfriend), the demand for long - distance phone service will decrease (shift left).
# Answer:
The demand for long - distance phone service will decrease (the demand curve shifts left) because Susan's preferences for using long - distance phone service (possibly to communicate with her boyfriend) have changed due to the fight.

### 4. Susan receives an inheritance from her aunt.
# Brief Explanations:
An inheritance increases Susan's wealth (a form of income/financial resources). Similar to a pay increase, if long - distance phone service is a normal good, an increase in wealth (income) will lead to an increase in the demand for long - distance phone service. The demand curve will shift to the right as this is a non - price determinant (wealth/income) change.
# Answer:
The demand for long - distance phone service will increase (the demand curve shifts right) because Susan's wealth (income - like resource) has increased, and long - distance phone service is likely a normal good.

### 5. Susan gets an e - mail account through the university.
# Brief Explanations:
E - mail is a substitute for long - distance phone service in terms of communication (to some extent, for example, to communicate with friends/family). When the availability of a substitute (e - mail) increases, the demand for the original good (long - distance phone service) will decrease. This is because consumers now have another option for communication, so they will demand less of the long - distance phone service. The demand curve for long - distance phone service will shift to the left.
# Answer:
The demand for long - distance phone service will decrease (the demand curve shifts left) because e - mail (a substitute for long - distance phone communication) has become more available to Susan.

### 6. The long - distance service Susan subscribes to increases its price by 10 percent.
# Brief Explanations:
According to the law of demand, when the price of a good (long - distance phone service) increases, ceteris paribus, the quantity demanded of that good decreases. This is a movement along the existing demand curve (a change in quantity demanded) because the change is due to the price of the good itself.
# Answer:
The quantity demanded of long - distance phone service will decrease. This is a movement up along the demand curve for long - distance phone service because the price of the service (the good) has increased.

### 7. Susan receives notice that she has been accepted in a summer internship program that will pay her substantially more than her current position.
# Brief Explanations:
The expectation of a future increase in income (from the summer internship) will affect her current demand. If she expects to have more income in the future, she may start to demand more of normal goods (like long - distance phone service, assuming it's a normal good) now. So the demand for long - distance phone service will increase (shift right) as her expected future income has increased, and this is a non - price determinant of demand.
# Answer:
The demand for long - distance phone service will increase (the demand curve shifts right) because Susan expects her future income to increase, and long - distance phone service is likely a normal good, so she will demand more of it now.

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QUESTION IMAGE

Question

Explanation:

1. Susan receives a pay increase in her campus job.

Answer:

2. The long - distance service Susan subscribes to lowers its price by 15 percent.