The Following Figure Shows the Demand Curves for Baby Formula

question 41

Multiple Choice

The following figure shows the demand curves for baby formula. Which of the following changes is likely to happen if the price of baby formula increases?​ ​
Figure 4.1

• A)A shift in the demand curve from D₁ to D₂
• B)A movement along demand curve D₁ from point a to point b
• C)A shift in the demand curve from D₂ to D₁
• D)A movement along the demand curve D₂ from point d to point c
• E)A movement from point b on the demand curve D₁ to point c on the demand curve D₂

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Definitions:

Capital Gains Yield

The price appreciation component of the total return on an investment, excluding any dividends or interest.

Annual Coupon

The yearly interest payment made to bondholders, based on the bond's face value.

Yield to Maturity

The total return expected on a bond if it is held until the date it matures.

Maturity Risk Premium

The additional yield that investors demand to compensate for the risk of holding a longer-term debt instrument, over and above the risk of short-term instruments.