Question

7 a What are the determinants of demand? Instructions: You may select more than one answer Click the box with a check mark for correct answers and an X for the wrong answers 476 2 Income Price of related goods 7 A goods own price 2 lechnology Print Tastes and preterences Resource prices Number of consumers b. Indicate whether a change in the value of each of the following determinants of demand leads to a movement along the demand curve or a shift in the demand curve. L Change in market price [Cik to salec LChange in incorne.[(Click to select) li. Change in consumer expectations (Cick to seect í. Change in the price of a related goodClick to select) - xchange inte price of an unrelated good@keselect) - vi. Change in preferences for this good [Cick to select) 司 < Prey 70121鎡Next > O Type here to search

Answer 1

Question 7

(a)

The determinants of demand refers to the factors that affects the demand for a good.

Following are the determinants of demand -

1. Income

2. Price of related goods

3. A good's own price

4. Tastes and preferences

5. Number of consumers

(b)

Change in own price of a good leads to movement along the demand curve while change in determinants other that own price of good leads to shift in the demand curve.

(i)

Change in market price

This will lead to movement along the demand curve.

(ii)

Change in income

This will lead to shift in the demand curve.

(iii)

Change in consumer expectations

This will lead to shift in the demand curve.

(iv)

Change in the price of related good

This will lead to shift in the demand curve.

(v)

Change in the price of unrelated good

This will lead to no change in the demand curve.

(vi)

Change in preference for this good

This will lead to shift in the demand curve.

Point A and Point B are on same demand curve (D).

So,

A change from Point A to Point B = A movement along the demand curve

Point A and Point C are on different demand curves.

So,

A change from Point A to Point C = A shift in the demand curve.