Topic 4 & 5

Question 1

Factors influencing demand

Answer 1

. Price of substitute
. Price of complements
. Changes in consumer income
. Advertising and branding
. Demographics
. Social and environmental trends
. Seasonality

Question 2

Movements along VS shifts in demand curve

Answer 2

Movement along -> changes in price ONLY
Shifts -> caused by other factors
. Rightward shift: increased demand
. Leftward shift: decreased demand

Question 3

Factors leading to demand changes

Answer 3

. Price of substitutes
. Price of complements
. Consumer income changes
. Advertising and branding
. Social trends
. Demographics
. Seasonality

Question 4

Supply curve: movement VS shift

Answer 4

Movement -> only when price changes
. Higher prices = quantity supplied increases
. Lower prices = quantity supplied decreases
Shifts -> factors other than price

Question 5

Factors leading to change in supply

Answer 5

1. Changes in cost of production: higher costs = less supply and viceversa
2. Introduction of new tech
3. Indirect taxes and subsidies
4. External shocks
5. Weather conditions
6. Government legislation
7. Price of related goods
8. Availability of resources