## Demand - self-test questions

1

##### Demand

Which of the following would be likely to decrease the demand for a product?

 a) An increase in advertising for the product b) An increase in the price of a substitute good c) An increase in the price of a complementary good d) An increase in income Please select an answerNo, that's not right. This is likely to increase the demand. No, that's not right. This is likely to increase the demand.Yes, that's correct. This would normally lead to a reduction in demand. No, this is likely to increase the demand (so long as the good is a normal good).

2

##### Shift in demand curve

Which of the following may lead to a shift in the demand curve? (Select all possible correct responses)

 a) An increase in the costs of producing the good b) An increase in income c) A decrease in income d) An increase in the price of the good e) An increase in the price of a substitute good f) An improvement in productivity a) Yes, that's correct. An increase in cost will shift the supply curve and not the demand curve.a) No, that's not right. An increase in cost will shift the supply curve and not the demand curve.b) Yes, that's correct. An increase in income will shift the demand curve to the right.b) No, that's not right. An increase in income will shift the demand curve to the right.c) Yes, that's correct. A decrease in income will shift the demand curve to the left.c) No, that's not right. A decrease in income will shift the demand curve to the left.d) Yes, that's correct. An increase in price will lead to a move along the demand curve and not a shift.d) No, that's not right. An increase in price will lead to a move along the demand curve and not a shift.e) Yes, that's correct. An increase in the price of a substitute good will mean a shift in the demand curve to the right as people demand more of this good instead.e) No, that's not right. An increase in the price of a substitute good will mean a shift in the demand curve to the right as people demand more of this good instead.f) Yes, that's correct. A change in productivity will shift the supply curve and not the demand curve.f) No, that's not right. A change in productivity will shift the supply curve and not the demand curve.

3

##### Supply

Which of the following would be likely to shift the supply curve for Mars Bars to the left?

 a) An increase in cocoa prices b) A decrease in cocoa prices c) An improvement in productivity for the production of Mars Bars d) An increase in price of Mars Bars Please select an answerYes, that's correct. Cocoa is a raw material for Mars Bars and an increase in prices will therefore shift the supply curve to the left.No, that's not right. Cocoa is a raw material for Mars Bars and a change in prices will therefore shift the supply curve, but prices have increased and this will shift the supply curve to the left.No, that's not right. Changes in productivity will shift the supply curve, but as productivity has increased this will shift the supply curve to the right. No, that's not right. Changes in price will lead to a move along the supply curve.

4

##### Demand

Which of the following would be likely to lead to an extension in demand for iPods?

 a) The launch by Sony of a cheaper hard-drive player b) An increase in consumer income c) An improvement in productivity for the production of iPods d) An increase in the cost of production of iPods Please select an answer No, that's not right. The Sony player will be a substitute and will therefore lead to a shift in the demand curve to the left (if at all).No, that's not right. An increase in income will mean people have more purchasing power and will therefore lead to a shift in the demand curve to the right, not an extension.Yes, that's correct. Changes in productivity will shift the supply curve, and as productivity has increased this will shift the supply curve to the right. This will lead to a move along the demand curve to the right - an extension in demand.No, that's not right. Changes in costs will shift the supply curve, but as costs have increased this will shift the supply curve to the left. This will lead to a movement along the demand curve to the left - a contraction in demand.