0
$\begingroup$

Because we have a change in Yield (Y) which is a factor of demand, we have a move in the $Q_D$. However, not all changes in the Yield affect the $Q_D$ the same way right? For example, if we know that $E_Y=2$ and that $ΔΥ/Υ=20$%, from the elasticity we can compute $ΔQ/Q= 40$%, so $Q_{D'}=1,4Q_D$ so it's not parallel. For the change in $Q_{D'}$ to be parallel, however, will the exercise disclose that $Q_D$ and $Q_{D'}$ are parallel, or that the demand changes for some constant, e.g. $Q_{D'}= Q_D+30$. Am I right? Thanks a lot!

$\endgroup$

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Browse other questions tagged or ask your own question.