Question

Which of the following events would shift the demand curve from D1 to D2? a. A change in the tax laws encourages people to consume less and save more. b. Firms become optimistic about the future and, as a result, they plan to increase their purchases of new equipment and construction of new factories. c. A change in the tax laws encourages people to consume more and save less. d. The government goes from running a budget deficit to running a budget surplus.

Answer 1

Answer: B. Firms become optimistic about the future and, as a result, they plan to increase their purchases of new equipment and construction of new factories.

Explanation: A change in the demand curve from D1 to D2 shows increase in demand that was not necessary caused by change in price of a commodity. Firm becoming more optimistic about the future and increased their purchase of a commodity like in this case new equipment and construction of new factory, will caused a shift in the demand curve. It was not caused by a decreased in the price of equipment they use or construction materials for a factory.

Answer 2

Answer:

b. Firms become optimistic about the future and, as a result, they plan to increase their purchases of new equipment and construction of new factories

Explanation:

Base on scenario been described in the question, the option that best explains the event that will the shift the demand curve from D1 to D2 is option b. This is so because company become hopeful that the and because of that , they plan on increasing the purchased of me equipment and building new branches as seen in the question. So option best explains the question which is the correct answer.