Supply and Demand

Question 1

What 6 factors could cause the demand curve to shift?

Answer 1

1) Changes in income
2) Advertising (good or bad)
3) Season (Christmas Trees)
4) Interest Rates
5) Population
6) Complimentary Goods/Substitute Goods price.

Question 2

What would cause a movement along the demand curve?

Answer 2

A change in price.

Question 3

What 6 factors would cause the supply curve to shift?

Answer 3

1) Unexpected event (War, Natural Disaster, Disease)
2) Indirect Taxes
3) New technology
4) Discovery of new reserves (eg. oil)
5) Change in a factor input cost (land costs, labour costs eg. NMW, more capital)
6) Competition

Question 4

If a greater amount of a complimentary good is demanded what would happen?

Show with diagram.

Answer 4

Demand curve would shift outward.

Question 5

What is joint supply?

Show with diagram.

Answer 5

One product which can be used to make two things. eg. Cows - leather and beef.

Demand for beef increases, supply of leather would increase.

Question 6

If a greater amount of a substitute good is demanded what would happen?

Show with diagram.

Answer 6

Demand curve shifts inward.