Examination questions
Short response questions
1. Distinguish between a shift of the demand curve for a product and a
movement along the products demand curve.
Shift in the demand curve:
- Consumer Income
-Price of related goods
-Tastes
-Expectations
-Number of Buyers
Movement along demand curve:
When demand or price change
2. With reference to two different determinants of demand, explain why the
demand for bicycles might increase. Use a diagram to support your
answer.
The price decreases or bicycles become more popular
3. Distinguish between a shift of the supply curve for a product and
movement along the products supple curve.
Shift in the supply curve:
-Input Prices
-Technology
-Expectations
-Number of sellers
Movement along the supply curve:
When supply or price change
4. With reference to two different determinants of supply, explain why the
supply of coffee beans might decrease. Use a diagram to support your
answer.
The price of coffee beans increases or there are less people who sell coffee
beans
5. Explain two exceptions to the Law of Demand.
1- Quality-price relationship: some people assume that expensive goods
are of higher quality than the low priced goods
2- Giffen goods: When people consume more as the price rises
Example- Households in China were shown to buy more rice when they
had to buy it at a higher price, and less when the price they paid was
subsidized. The reason for this is that, even when expensive, rice was still
the cheapest source of calories available. Therefore, when the price of rice
was cut, households had more money left over after buying rice. Some of
this was spent on buying more expensive foods (meat, vegetables and
fruit), which reduced their need for rice.