QuestionMay 31, 2025

Alexis owns a small business selling power tools This past month she has noticed that the quantity demanded for high-end electric drills has decreased by 25% Which of the following demand curve shifting events is a possible explanation for this change? The price of electric drills has increased. Customers' incomes have decreased Customers' incomes have increased

Alexis owns a small business selling power tools This past month she has noticed that the quantity demanded for high-end electric drills has decreased by 25% Which of the following demand curve shifting events is a possible explanation for this change? The price of electric drills has increased. Customers' incomes have decreased Customers' incomes have increased
Alexis owns a small business selling power tools This past month she has noticed that the quantity demanded for high-end electric
drills has decreased by 25%  Which of the following demand curve shifting events is a possible explanation for this change?
The price of electric drills has increased.
Customers' incomes have decreased
Customers' incomes have increased

Solution
4.1(140 votes)

Answer

The price of electric drills has increased. Explanation 1. Identify the effect of price change An increase in the price of electric drills typically leads to a decrease in quantity demanded, as per the **law of demand**. 2. Analyze income changes A decrease in customers' incomes generally reduces their purchasing power, leading to a decrease in quantity demanded for non-essential goods like high-end electric drills. 3. Evaluate the impact of increased income An increase in customers' incomes usually increases their purchasing power, potentially increasing the quantity demanded for luxury items, not decreasing it.

Explanation

1. Identify the effect of price change<br /> An increase in the price of electric drills typically leads to a decrease in quantity demanded, as per the **law of demand**.<br /><br />2. Analyze income changes<br /> A decrease in customers' incomes generally reduces their purchasing power, leading to a decrease in quantity demanded for non-essential goods like high-end electric drills.<br /><br />3. Evaluate the impact of increased income<br /> An increase in customers' incomes usually increases their purchasing power, potentially increasing the quantity demanded for luxury items, not decreasing it.
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