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Which of the following could result in a movement from point A to point B? a

Economics Dec 12, 2020

Which of the following could result in a movement from point A to point B? a. change in income b. a change in the price of restaurant meals c. a change in the price of movies d. a change in the cost of producing a restaurant meal

Expert Solution

option (b) a change in the price of restaurant meals is correct

The reason is that a change in the price of food at a restaurant will make it more expensive or cheaper, depending on whether the price has increased or decreased and hence, the consumers will change the quantity demanded of meals. This leads a movement along the demand curve. If the price rises then the quantity demanded of meals will fall, and this will lead to a movement down the demand curve, and if price falls, more quantity will be demanded leading to an upward movement in the demand curve.

This will have a reverse effect on the supply curve. This means as price rises; there is movement up along the supply curve as it is more profitable now to supply and vice-versa.

option (c) a change in the price of movies is also correct

The reason is similar to option (b) above. A change in the price of movies will change the quantity demanded by the consumers. If the movie price rises, then the quantity demanded falls and vice-versa. This leads to a downward movement in the demand curve, and if price rises, there will be an upward movement in the demand curve.

In the case of a supply curve, an increase in the movie prices will cause an upward movement in supply and a decrease in prices will have a downward movement in supply.

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