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which one of the following would not lead to a shift in the demand curve for overseas holidays?
A: a rise in the price of domestic holidays.
B: a rise in the exchange rate for the domestic currency.
Hello sir
In the book option B is correct.
My question in that, Shift in demand mean increase or decrease in demand with the price remain constant so here both Option A and B are correct because in Option A the demand change with price. So what is logic here that in my kaplan book option A in incorrect.You have to distinguish between a change in demand and a shift in the demand curve. A change in price will always (or almost always) change demand: higher prices = lower demand.
As you say, a shift in the demand curve changes demand at a constant price.
A rise in cost of domestic prices will make foreign holidays more attractive and demand will rise even if foreign holiday prices are constant.
A change in the exchange rate will alter the price that has to be paid for foreign holidays, so this is just changing demand in response to price changes. There is no shift in the demand curve.
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