2.4 Increase/Decrease in demand

Question 1

What are inferior goods?

Answer 1

Goods for which demand falls when income rises.

Question 2

What are the seven factors that cause the demand curve to shift?

Answer 2

Population, advertising, substitutes, Income, Fashion, Interest rates and complements. These are the factors that cause the demand curve to shift.

Question 3

How does population affect the demand curve?

Answer 3

Increase in population will cause an increase in demand, right shift.

Question 4

How does advertising affect the demand curve?

Answer 4

Good advertising will cause an increase in demand.

Question 5

How do substitutes affect the demand curve?

Answer 5

If the price of substitutes go down, its a fall in demand, left shift.

Question 6

How does income affect the demand curve?

Answer 6

If income increases demand increases. Right shift (Normal Goods) Left shift (Inferior Goods)

Question 7

How does fashion affect the demand curve?

Answer 7

In fashion, Increase in demand.

Question 8

How do interest rates affect the demand curve?

Answer 8

If interest rates rise, there will be a decrease in demand.

Question 9

How do complement goods (DVD Player) affect the demand curve?

Answer 9

Price goes up, demand goes down. For example if the price of dvds goes down the demand for dvd players is likely to rise.