Question

Which events could cause the change in demand shown on this graph?

Check all that apply.

A product becomes more popular.
The number of consumers interested in a product drops.
A company's competitor lowers its prices.
A company offers a better product than its competition.

Answer 1

I can’t see the graph, so I’ll describe what each event does to the demand curve — then you can match it to the direction shown.

- A product becomes more popular → increases demand (demand curve shifts right).
- The number of consumers interested in a product drops → decreases demand (demand curve shifts left).
- A company's competitor lowers its prices → tends to decrease demand for this company’s product (buyers switch to the cheaper substitute) → shift left.
- A company offers a better product than its competition → increases demand for that company’s product → shift right.

So if the graph shows a rightward shift (demand up), check: “A product becomes more popular” and “A company offers a better product than its competition.”
If it shows a leftward shift (demand down), check: “The number of consumers… drops” and “A company's competitor lowers its prices.”