Economics

Examination Questions (Paper 1, Part (a) questions) 1. Distinguish between a shift of the demand curve for a product and a movement along the product’s demand curve.  Movement along the demand curve is only affected by the price of the good. Which subsequently affects the quantity demand of the particular product. For example when the price of a shirt increases, the quantity demand for the shirt decreases causing a movement along the demand curve. Demand for Shirts

Price P2 Y

-

P1

X

The shift along the demand curve is from point X to point Y. It is a downward movement along the curve

Q2

Q1

Quantity

Demand for Shirts Price - D1 D Quantity When the number of consumers increases. Thus the curve shifts to the right. demand for shirts also increases. demand for the product (shirts) will also increase and vice versa. A shift of the demand curve on the other hand may be affected by a few factors such as income of consumer. From D to D1 . number of buyers. expectations and many more. For example. if number of consumer increases.

explain why the demand curve for bicycles might increase. Therefore the curve shifts to the right. With reference to two different determinants of demand. The factor of ‘number of buyers’ . Use a diagram to support your answer. Demand for Bicycles Price D1 D Quantity Demand curve shifts to the right.  A few of the factors that affect demand are number of buyers and income of a consumer.2. 1.As the number of buyers for bicycles increase. the demand for bicycles also increases. From line D1 to line D2 .

Demand for Bicycles Price - Demand curve shifts to the right. Therefore the demand curve shifts to the right. From line D1 to line D2 D1 D Quantity . The factor of ‘income of a consumer’ .2.As the income of consumers increases. their disposable income also increases thus giving the consumer more purchasing power resulting in more demand for bicycles.

For example. Market for shirts Price P2 Y P1 X Movement along the supply curve from point X to Y. Distinguish between a shift of the supply curve for a product and a movement along the product’s supply curve. Q1 Q2 Supply .  Movement along the supply curve is only related to the price of the related product. when the price of shirts increases. Upward movement along the supply curve. causing movement along the supply curve. Which affects the quantity supply of the particular product.3. the supply for shirts also increases because the company wants to make more profit.

the supply for shirts would increase as it would take less money to produce and increase profit. From S to S1 S S1 Supply . if the cost of production of shirts were to decrease. technology and many more. A shift of the supply curve may be affected by a few factors such as cost of production. For example. and number of sellers. causing a shift in the supply curve Market for shirts Price S S1 - Supply curve shifts to the right. subsidies.

Use a diagram to support your answer. supply of coffee beans is low. Therefore due to bad weather conditions. coffee beans originate from the fruit that needs specific weather conditions to grow properly.4.  A few factors that affect supply is temperature and taxes. explain why the supply of coffee beans might decrease.As we know. . The factor of ‘temperature’. 1. With reference to two different determinants of supply. Market for coffee beans Price S2 S - Supply curve shifts to the left. From S to S2 S2 S Supply . This causes supply curve to shift to the left.

Market for coffee beans Price S2 S S2 Supply curve shifts to the left. For example. thus reducing the supply of coffee beans. From S to S2 S Supply . The factor of ‘Tax’. Therefore these coffee beans are exported to other countries. if the tax for exporting coffee beans were to increase this would technically increase the cost of production.2. .The coffee beans usually originate from foreign countries such as Brazil and Indonesia. This causes the supply curve to shift to the left.