Assume the Graph Shown Represents the Market for Button-Up Shirts

question 39

Multiple Choice

Assume the graph shown represents the market for button-up shirts and was originally in equilibrium where demand (D) and supply (S) intersect. What type of shock might cause the demand curve to shift to D₂?

• A)An increase in the price of buttons
• B)An increase in the price of ties
• C)An increase in the price of sweatshirts
• D)An increase in consumers' incomes

---

Definitions:

Monopolistically Competitive

A market structure where many sellers offer products or services that are similar but not perfect substitutes, allowing for some degree of market power.

Product-variety Externality

The impact on consumer welfare or market efficiency due to variety in products available, often seen as a positive externality in markets.

Business-stealing Externality

A negative effect where a new entrant in a market draws customers from existing businesses, potentially harming those businesses without creating new value for the market as a whole.

Negative Externality

A cost that affects a party who did not choose to incur that cost, often associated with the production or consumption of a good or service.