Question
Is it strictly true that a change in the price of a good causes a change in the quantity of that good demanded, but not
Is it strictly true that a change in the price of a good causes a change in the quantity of that good demanded, but not a shift in the demand curve for the good?
a) What effect do you suppose the large increases in the price of gasoline in the 1970s had on the demand (curve) for fuel-efficient cars?
b) What effect did this have after several years on the original demand (curve) for gasoline?
c) If the price of a good returned to its previous level after a time, but the quantity demanded did not, would this be evidence that the demand had changed in the interim?
Draw a graph to illustrate your answer.
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