chp 7

Question 1

Demand

Answer 1

The individuals must be able to afford a product and that a firm is prepared to sell this product to them.
The willingness and ability to buy a product

Question 2

Demand and price relationship

Answer 2

Inversely related

Question 3

Individual demand

Answer 3

The amount of a product an individual would be willing and able to buy at different prices. A consumers demand for a product

Question 4

Market demand

Answer 4

For a product is arrived at by the aggregation of the demand of all potential consumers or buyers. Total demand for a product

Question 5

What can a demand curve diagram be used to demonstrate how

Answer 5

A change in the price of a product affects the quantity that is demanded.

Question 6

Extension in demand.

Answer 6

A rise in the quantity demanded caused by a fall
In the price of the product itself

Question 7

Contraction in demand

Answer 7

A fall in the quantity demanded caused by a rise in the price of the product itself

Question 8

Extension in demand and contraction in demand is referred to

Answer 8

Quantity demanded

Question 9

Refer to the weekly demand for cinema tickets. Reproduce the demand curve and identify
An extension in demand as the price of cinema tickets falls from
22 to 16

A contraction in demand as the price of cinema tickets increase from 13 to 16

Answer 9

Y axis price
X axis number of tickets
1st graph decrease curve (an extension in demand)

2nd a contraction in demand an increased curve

Question 10

Changes in demand

Answer 10

Shifts in the demand curve

Question 11

Any change in femalnf will cause a

Answer 11

Shift in the entire demand curve as there is no change in the price of the product

Question 12

What caused changes in demand

Answer 12

Income level
Other factors
Taste and fashion
Population
Advertising
Prices of substitutes and complements

Question 13

Relegated products

Answer 13

Substitutes and complements

Question 14

Substitute

Answer 14

A product that can be used in place of another

Question 15

Complement

Answer 15

A product that is used together with another product

Question 16

Normal goods

Answer 16

A product whose demand increases when income increases and decreases when income falls

Question 17

Inferior goods

Answer 17

A product whose demand decreases when income increases and increases when income falls

Question 18

How is a good either a normal or inferior

Answer 18

Depends on the income level of consumers

Question 19

Increases in demand

Answer 19

A rise in demand at any given price causing the demand curve to shift to
The right

Question 20

Decrease in demand

Answer 20

A fall in demand at any given price causing the demand curve to shift to the left

Question 21

The sale of upmarket Range Rover Evoque vehicles in China increased by 19% in 2016. Explain two reasons for the increase in demand and how this affects the demand curve.

Answer 21

Two possible reasons for the increase in demand could be an increase in disposable incomes of some Chinese consumers and a major advertising campaign for this upmarket vehicle. The increase in demand will lead to a shift to the right in the demand curve.

Question 22

Sambas is a popular sauce widely used in Indonesiahome cooking. Suppose there has been a decrease in demand for sambal.
State the effect on the demand curve of the sauce

Identify two reasons for the fall in demand

Answer 22

I) The demand curve for sambal shifts to the left.

I) Reasons for fall in demand may include a fall in the price if similar cooking sauces, or an
in creases in the price of complements such as
fish and vegetables.

Question 23

What is the relationship between demand and price

Answer 23

An inverse one whereby a decrease in price leads to an increase in quantity demanded and an increase in price leads to a decrease in quantity demanded

Question 24

Demand curve show
A contraction in demand curve
A decrease in demand explain what it means

Answer 24

A contraction in demand is shown by a movement up the demand curve. This is a consequence of a rise in the price of the product

A decrease in demand is shown by a shift to the left of the demand curve.
This means that there is a fall in demand at any given price

Question 25

Give three reasons why the demand for chocolate is falling in many developed countries

Answer 25

An increase in the price of chocolate A growing awareness of the health risks of consuming too much sugar Greater availability of healthier alternatives

Question 26

Explain the likely effects on the demand for a well-known brand of cola when i its price increases i there is an increase in the price of a substitute brand of cola.

Answer 26

An increase in the price of this brand of cola is shown by a movement up the demand curve to point B where price is now P2 and the quantity demanded is reduced An increase in the price of a substitute brand of cola is represented by a shift outwards of the demand curve. At any price such as p2 more will be demanded

Question 27

Global sales of electric vehicles have increased by over 1000% since 2012. Explain two likely causes of this increase in demand.

Answer 27

An increase in the price of petrol vehicles A positive shift in favour of electric vehicles for environmental reasons And advertising campaign by electric vehicle manufacturers An increase in disposable incomes

Question 28

A new smart-phone has been launched, but its price is higher than expected. What will happen to a person's Willingness and ability to purchase this product?

Answer 28

Decrease in the willingness and a decrease in the ability

Question 29

A retailer decreases the price of a poorly selling product. What will happen to the demand curve?

Answer 29

There will be a movement down the demand curve

Question 30

A government advertising campaign links the excessive consumption of fizzy drinks with type 2 diabetes. What will happen to the market demand curve for fizzy drinks?

Answer 30

It will shift to the left

Question 31

If sales of chicken and rice from local takeaway stalls have been falling when income levels have been increasing, what type of goods might chicken and rice be?

Answer 31

Inferior goods