DEMAND . List the factors change demand and shift the demand curve. Tell what ha

Question

DEMAND . List the factors change demand and shift the demand curve. Tell what happens 0 demand and the dermand curve when thore is an increase in the actor. 2. Computers are a complement to computer sottware. Suppose the price of a computer falls. How does this fall in price affect the demand for computer software and the demand curve for computer software? 3. What is the difference between a normal good and an inferior good. Give an example of each 4. Suppose Katie, Mark, and Bobby are the only consumers in the market for ice cream Using the demand schedules in the table above, what is the market demand curve for ice cream? 5. Soft drinks are a nomal good. Draw a graph showing the effect of an increase in income on the demand for soft drinks What is the difference between quantity supplied and supply? does this change affect the supply of coemputer software and the supply curve of 6. 7. Suppose that the mumber of companics selling computer software docreases. How computer software? 8. Suppose that the productivity used to produce computers advances. How does this change affect the supply of computers and the supply curve of computers? 9. The table above indicates how many thousands of containers of ice cream three difserent companies are willing to produce at diffierent prices. Does this information reflect the law of supply? Why or why no? MARKET 10. When does a surplus occur? 11. Suppose Ramen noodles, an inespensive but a quite tasty dish, are an inScrior good Why do grocery stores in college owns, that is, towns with a large fraction of college students, stock a lot of Ramen noodles? 12. In carly 2009 the price of computer memory chips rose. In a demand and supply model, shifts in what curve or curves could have brought about the higher price? 13. The diagram above illastraies the market for apartments in Victoria, British Columbia a If the current rent is $300 per month, is there a shortage or surplus in the apartment market and how much is the shortage or surplus b. What is the equil ibrium rent and quantisy of apartmerts

Explanation / Answer

Question 1

Following are the factors that affect demand and shift the demand curve -

1. Income of the consumer

2. Price of related goods

3. Tastes and preferences

4. Future expectations about price

Income of the consumer

Income affect the demand for a good and shift the demand curve of a good.

With respect to income, good can be classified into two - normal good and inferior good.

In case of normal good, increase in the income leads to the increase in the demand and shifts the demand curve to the right.

In case of inferior good, increase in the income leads to the decrease in the demand and shifts the demand curve to the left.

Price of related goods

Related goods can be classified into two - substitute goods and complementary goods

In case of substitute goods, increase in the price of one good leads to the increase in the demand for other and shifts the demand curve for other good to the right.

In case of complementary goods, increase in the price of one good leads to the decrease in the demand for other and shifts the demand curve for other good to the left.

Tastes and perferences

Tastes and preferences also impact demand for a good and shifts the demand curve.

Favorable change or increase in taste and preference leads to increase in demand and shifts the demand curve to the right.

Future expectations about price

Future expectations regarding price also impacts the demand and shifts the demand curve.

If consumer expects the price of good to increase in future, they increase their current demand for good and due to this demand curve shifts to the right.

Question 2

In case of complementary goods, increase in price of one good leads to the decrease in demand for other and decrease in the price of one good leads to increase in demand for other good.

Computers are a complement to computer software.

So,

If price of computer falls then this will lead to increase in demand for computer software.

This increase in demand for computer software will shift the demand curve for computer software to the right.

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