Price Determination In Compt Market (2)

Question 1

Relationship between personal income and the demand for a good

Answer 1

Rise in income causes their demand for the good to rise at each and every price level such as a normal good.

Rise in income causes their demand for the good to fall at each and every price level such as supermarket ‘own brand’ food and bus travel.
Inferior goods.

Question 2

Relationship between population size and the demand for a good

Answer 2

When the size of the population increases, the demand for most goods will increase at each and every price level

Question 3

Relationship between taste/preferences and the demand for a good

Answer 3

Tastes can be influenced by advertisement ( positive and negative)

An advert about Wimbledon would shift demands of tennis racquet to the right because people would want to buy a tennis racquet.

An avert about the health risks of a fast food restaurant will shift demands of fast food restaurants to the left because nobody will go to the restaurant

Question 4

Substitute good

Answer 4

A good that fulfills the same purpose as another good

Question 5

Complements

Answer 5

Goods that can be consumed together such as strawberries and cream

Question 6

Quality effect on the demand curve

Answer 6

Rise in quality, increase in demand at each and every price level

Question 7

Weather/seasonal fluctuations on the demand curve

Answer 7

During a hot summer, demand for barbecues will increase at each and every price level

In winter months, the demand for ski equipment will increase at each and every price level