Practice Exercise 2: Demand

Graphically show what will happen in each case (to demand or quantity
demanded). Remember to always assume ceteris paribus unless otherwise noted.
Make sure you label your graph correctly.

1. Assume peanut butter and jelly are complements. What will happen to the demand
or quantity demanded for jelly if the price of peanut butter increases?

2. Assume that Jello is a normal good. What will happen to the demand or quantity
demanded of Jello if the income of the people who buy Jello goes down?

3. Assume that turkey and ham are substitutes. What will happen to the demand or
quantity demanded for ham if the price of turkey increases?

4. Assume the price of cars increases. What will happen to the quantity demanded of
cars?

5. Assume Spam is an inferior good. What will happen to the demand or quantity
demanded of Spam if the income of the people buying Spam decreases?

6. Assume popcorn and movies are complements. What will happen to the demand or
quantity demanded for popcorn if the price of movies goes down?

7. Assume that bread and butter are complements. Also assume that bread is a
normal good. What will happen to the demand or quantity demanded for bread if the
price of butter increases AND the income of the people who buy bread
increases? (Hint: shift one at a time but on the same graph).

8. Assume that apples are an inferior good. Also assume that apples and oranges are
substitutes, and that apples and caramel are complements. What will happen to the
demand or quantity demanded for apples if the price of oranges decreases AND the
income of the people who buy apples increases AND the price of caramel
increases? (Hint: shift one at a time but on the same graph).