-Refer to Exhibit 3-6.If D₁ is the relevant demand curve,a decrease in the price of good X may cause A) demand to shift from D₁ to D₂. B) demand to shift from D₁ to D₃. C) a movement along D₁ from point A to point B. D) a movement along D₁ from point A to point C.

Question

Quizplus · Accepted Answer

A decrease in the price of good X will cause a movement along the same demand curve D₁ from point A to point B. This is because the quantity demanded of good X will increase as the price decreases, while the other factors affecting demand remain constant. Therefore, there is no shift in the demand curve, only a movement along it. Choices A and B are incorrect because they imply a shift in the demand curve, which is not supported by the given information. Choice D is incorrect because point C is not relevant to the question.