The figure above shows the demand for hot dogs shifting out (more demanded at every price). Assume hot dogs are a normal good. Which of the following could have caused the shift shown?

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BlackTom AI · Accepted Answer

The scenario shows the demand for hot dogs shifting outward, meaning at every price, more hot dogs are demanded. To assess what could cause this, we should recall that for a normal good, demand can be influenced by factors other than price, such as income, tastes, expectations, and the prices of related goods.

First, consider the idea of related goods. If the price of a good that is a complement to hot dogs—namely hot dog buns—falls, consumers can purchase both more easily and at a lower combined cost. Since buns and hot dogs are typically consumed together, a drop in bun prices effectively lowers the total cost of consuming a hot dog meal, which can increase the quantity demanded of hot dogs at every price, shifting the hot dog demand curve to the right. This is because the demand for hot dogs grows when the price of its complement decreases.

Second, think about what would not cause a rightward shift in demand. If the price of buns falls, it does not directly alter consumers’ preferences or incomes; it alters the relative cost of consuming a hot dog with its bun, which is a substitution in the consumption bundle rather than a change in the hot dog’s own price. While a fall in bun prices can increase quantity demanded due to the combined effect, it is more precise to classify this as a shift in the demand curve for hot dogs caused by a change in the price of a related good (complement).

Next, evaluate the remaining potential options in general terms (even though they aren’t listed here). An increase in income, if hot dogs are normal, would typically shift demand outward as well. A change in tastes favoring hot dogs would also shift demand outward. On the other hand, a rise in the price of hot dogs would cause movement along the demand curve, not a shift of the entire demand curve.

Finally, synthesize these ideas: the only option provided that directly aligns with a demand-shift mechanism for hot dogs (given they are a normal good) is a drop in the price of a complement, hot dog buns. The logic is that cheaper buns reduce the effective cost of a hot dog meal, increasing overall quantity demanded at every price and shifting the demand curve to the right.

QAMO 2010-004 Fall 2025 Unit 2: Demand -- Short Problems

The figure above shows the demand for hot dogs shifting out (more demanded at every price). Assume hot dogs are a normal good. Which of the following could have caused the shift shown?

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