above will lead to decreased demand and will show as a shift of the entire demandcurve to the left.
Question2: WHAT EFFECT WILL EACH OF THE FOLLOWING HAVE ON THEDEMAND?
A. PRODUCT B WILL BECOME MORE FASHIONABLE: Demand for Product Bwill definitely rise. Fashion trends have a direct influence on product demand.B. THE PRICE FOR SUBSTITUTE PRODUCT C FALL: With the entry of cheaperproduct substitutes for Product B, demand for Product B is expected to declineover time.C. INCOME DECLINES AND PRODUCT B IS AN INFERIOR GOOD: Decrease inconsumer incomes and the poor quality of Product B, demand forProduct B will definitely decrease.D. CONSUMERS ANTICIPATE THAT THE PRICE OF B WILL BE LOWER INTHENEAR FUTURE: Hence, surge in consumer demand can expected in the nearfuture
for the mean time, demand for Product B will remain unchanged.E. THE PRICE OF COMPLEMENTARY PRODUCT D FALLS: This could bolsterconsumer preference for Product B, hence may result to continued consumerpatronage and/or increase in demand.
Question3: ASSESS THE EFFECTS OF THE TERRORIST ATTACKS OFSEPTEMBER 11, 2001 AND THE WAR ON TERRORISM ON THE DEMANDFOR THE FOLLOWINGITEMS IN THE UNITED STATES: AIRLINE TICKETS,GASOLINE, HOTELROOMS, BOOKS ABOUT AFGHANISTAN AND ARABICINTERPRETERS.Answer
: The 9/11 terror attacks on US soil and the resulting war on terrorismdefinitely have a negative impact on the travel industry worldwide (that is fromairline to the hotel industries). Since the attacks were perpetuated by terror groupsbased in the Middle East, Middle East nationals became suspect while Arabicculture and literature turned out to be unpopular. With the exception of oil and gasproducts, demand for the items mentioned above dramatically fell, especiallyduring the years immediately following the incident. Demand for Middle East oilproducts was not affected.