Imagine that the price of apples rises. How is demand affected?

Question

BlackTom AI · Accepted Answer

An increase in the price of apples causes a contraction in quantity demanded — a movement up along the existing demand curve — not a shift of the demand curve itself.

1) Relevant knowledge points and concepts
- Law of demand: all else equal, when price rises, quantity demanded falls.
- Distinction: "quantity demanded" (a point on the demand curve) changes when price changes; "demand" (the whole demand curve) shifts only when non-price determinants change (income, tastes, prices of substitutes/complements, expectations, number of buyers).

2) Step-by-step reasoning
- Start with the demand curve for apples, which shows the relationship between price and quantity demanded.
- If the price of apples rises and nothing else changes, consumers buy fewer apples. That is a decrease in quantity demanded.
- Graphically, this is represented as a movement from one point on the demand curve to another point with a lower quantity at a higher price (a contraction of quantity demanded).
- The demand curve does not shift because the underlying non-price determinants (income, preferences, etc.) remain unchanged.

3) Numerical illustration (intermediate steps)
- Example: At P1 = $1 per apple, Q1 = 10 apples demanded. If price rises to P2 = $2, Q2 might fall to 6 apples. The quantity demanded contracted from 10 to 6 — movement along the curve.

4) Why the correct answer is correct
- Choice (a) “Demand will contract” is intended to mean a contraction in quantity demanded caused by the price increase. This matches the law of demand and the movement along the existing demand curve.

5) Why the other options are incorrect
- (b) “Demand curve will shift rightward” — incorrect: shifts right require positive changes in non-price factors (e.g., higher income for normal goods), not a price change.
- (c) “Demand curve will shift leftward” — incorrect: leftward shifts represent a decrease in demand due to non-price factors, not a price rise.
- (d) “Demand will decrease” — ambiguous/incorrect: in standard terminology this implies a leftward shift of the demand curve (a change in demand), whereas a price rise produces a contraction in quantity demanded, not a demand decrease.

Conclusion: The correct answer is (a) Demand will contract. This matches the provided answer.

Imagine that the price of apples rises. How is demand affected?Single choice

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