Increase/Decrease in demand (3rd law)

Question 1

What are factors that can cause an increase in demand (7)

Answer 1

Income rise, population rise, expectations of a price rise, rates of interest fall, a rise in the price of a substitute good, fall in price of a compliment and rise in advertising

Question 2

What type of shift would an increase in demand lead to

Answer 2

An outward shift of the demand from D0 to D1, resulting in an increase in equilibrium price from Pe to P1 and an increase in quantity from Qe to Q1. A new eq point is established at E1

Question 3

What happens from E0 TO E1 (Increase in demand)

Answer 3

there is an extension of the supply curve

Question 4

Increase in demand leads to

Answer 4

Increase in eq. price and eq. quantity

Question 5

What are factors that can cause a decrease in demand?

Answer 5

Income fall, population fall, the expectation of a price fall, rates of interest rise, fall in the price of substitute, rise in price of compliment and a fall in advertising

Question 6

A decrease in demand would lead to

Answer 6

An inward shift of the demand curve from D0 to D1 resulting in a decrease in eq price from Pe to P1 and a decrease in eq. quantity from Qe to Q1

Question 7

A new eq. point is established at (decrease in demand)

Answer 7

E2. There is a contraction in the supply curve from E1 to E2

Question 8

A decrease in demand leads to

Answer 8

A decrease in eq. price and eq. quantity