1.Explain whether each of the following events represents (i) a shift of the demand curve or (ii) a movement along the demand curve.
A store owner finds that customers are willing to pay more for umbrellas on rainy days.
The quantity of umbrellas demanded is higher at any given price on a rainy day than on a dry day. This is a rightward shift of the demand curve, since at any given price the quantity demanded rises. This implies that any specific quantity can now be sold at a higher price.
When Circus Cruise Lines offered reduced prices for summer cruises in the Caribbean, their number of bookings increased sharply.
The quantity of summer Caribbean cruises demanded rises in response to a price reduction. This is a movement along the demand curve for summer Caribbean cruises.
People buy more long-stem roses the week of Valentine’s Day, even though the prices are higher than at other times during the year.
The demand for roses increases the week of Valentine’s Day. This is a rightward shift of the demand curve.
A sharp rise in the price of gasoline leads many commuters to join carpools in order to reduce their gasoline purchases.
The quantity of gasoline demanded falls in response to a rise in price. This is a movement along the demand curve.