Question 3 20 Points The figure below shows the demand of a

Question #3 (20 Points) The figure below shows the demand of a normal good with respect to its price. \"For some reason\", the demand for this good decreases from D1 to D2, as shown with the left shift of the demand curve in the figure below. Price D1 Quantity Please fill in the blanks with either \"decrease\" or \"increase\" below to identify possible reasons that would lead to the demand decrease. in income (3.5 pts) In population (3.5 pts) i price of complement goods (3.5 pts) in price of substitute goods (3.5 pts) taxes on the good (3.5 pts) in marketing/advertisement/promotions for the good (2.5 pts)

Solution

The demand decreases when,

Decrease in Income, as this would reduce the disposable income
Decrease in Population, as this would reduce the quantity needed
Increase in price of complement, as consumers would need to spend extra money this would reduce the quantity consumed
Decrease in price of substitute, this would make people to switch over to other goods which increases demand
Increase in taxes of good, as consumers would need to spend extra money this would reduce the quantity consumed
Decrease in marketing or advertising or promotions of good