7) Theory Of Demand

Question 1

Why does the demand curve shift

Answer 1

⚫️if demand for a good or services

➡️changes due to any reason other than price

Question 2

Name factors of a shift in demand curve, caused by a change to the non-determinant

Answer 2

⚫️taste

⚫️income

⚫️price of substitutes

⚫️price of complements

⚫️derived demand

⚫️speculation and expectations of future price changes

⚫️population

Question 3

What is taste affected by to move the demand curve

Answer 3

⚫️affected by
➡️advertising
➡️fashion
➡️changes in technology

Question 4

How does income shift the demand curve, if income rises

Answer 4

⚫️as income rise
➡️demand for most good will increase
➡️as people can now buy more of all goods and services

Question 5

How does price of substitutes shifts the demand curve, using the example of coke and pepsi

Answer 5

⚫️price of coke falls
➡️demand for coke increase
➡️ceteris paribus
➡️lead to fall in demand for pepsi

Question 6

How does price of complements shift the demand curve, use the example of cornflakes and milks

Answer 6

⚫️if price for cornflakes fall
➡️demand for cornflake will rise
➡️ceteris paribus 
➡️cornflakes and milk used together
➡️demand for milk will rise

Question 7

How does derived demand shift the demand curve, using example of cola

Answer 7

⚫️demand for a good
➡️results in demand for other goods

➡️if demand for cola increases
➡️demand for components used to make cola increases
➡️sugar, plastic, workers

Question 8

How does speculation and expectations of future prices shift the demand curve

Answer 8

⚫️if expected that a good
➡️price increase in future
➡️people will buy more now
➡️ceteris paribus

⚫️speculators make a lot of money
➡️buying commodities like gold, rubber and oil
➡️when price is low
➡️selling them when prices rise

Question 8

How does population shift the demand curve

Answer 8

⚫️increase in population
➡️lead to increase in number of buyers
➡️of all goods and services in the market