Name: _____________________________ Economics

2.1 Demand
1. Explain how the demand for guitar strings could be influenced by an increase in the
price of guitars.

2. Explain how an ageing populations could affect the demand for false teeth.

3. Explain how the demand curve for holidays abroad could be influenced by

a. Higher income levels

b. An increase in the price of airline tickets

c. Discounts offered by domestic hotels

4. Explain how the demand curve for bicycles could be influenced by:
a. An increase in their price

b. A significant increase in the price of helmets

c. Increased levels of pollution

5. Explain how the demand curve for coffee could be influenced by:
a. Medical reports stating that moderate coffee drinking may have certain health
benefits
 Name: _____________________________ Economics

b. A sharp increase in the price of sugar

c. A fall in the price of tea

6. Rewrite the following statements and fill in the blanks by using the terms provided
below. Some terms may be used more than once or not at all.

Decrease Substitutes Inferior

Increase Complements Normal

Demand Right Shift

Quantity demanded Left Movement along

An increase in the price of watermelons will lead to a decrease in (1) __________________. On

a diagram this implies that there will be a (2) __________ of the demand curve.

If Coca Cola Co. decides to increase the price of Coca Cola, then the demand for Pepsi will

probably (3) ______________ and shift to the (4) ______________ as the two products are

considered (5) ______________.

Demand for used cars will (6) ______________ when incomes increase if consumers start

looking into better substitutes, such as new cars. In this case, used cars are considered (7)

______________ goods and their demand curve will shift to the (8) ______________. If pizza

and hamburgers become more expensive, then demand for soft drinks will probably (9)

_______________, as soft drinks and fast food are (10) ______________.

If a government announces that in five months it will increase the tax on heating oil, then one

may safely assume that the demand for heating oil will now (11) _______________ and, thus,

the demand curve shifts to the (12) _______________. If the price of milk increases, then

quantity demanded will (13) _______________ so, on a diagram, there is no (14)

______________ but only a (15) _______________ the demand curve.

 Name: _____________________________ Economics

Solutions:

1. Rewrite the following statements and fill in the blanks by using the terms provided
below. Some terms may be used more than once or not at all.

Decrease Substitutes Inferior

Increase Complements Normal

Demand Right Shift

Quantity demanded Left Movement along

An increase in the price of watermelons will lead to a decrease in (1) quantity demanded. On a

diagram this implies that there will be a (2) movement along the demand curve.

If Coca Cola Co. decides to increase the price of Coca Cola, then the demand for Pepsi will

probably (3) increase and shift to the (4) right as the two products are considered (5)

substitutes.

Demand for used cars will (6) decrease when incomes increase if consumers start looking into

better substitutes, such as new cars. In this case, used cars are considered (7) inferior goods

and their demand curve will shift to the (8) left. If pizza and hamburgers become more

expensive, then demand for soft drinks will probably (9) decrease, as soft drinks and fast food

are (10) complements.

If a government announces that in five months it will increase the tax on heating oil, then one

may safely assume that the demand for heating oil will now (11) increase and, thus, the

demand curve shifts to the (12) right.

If the price of milk increases, then quantity demanded will (13) increase so, on a diagram,

there is no (14) shift but only a (15) movement along the demand curve.