Question

DEMAND WORKSHEET Exercise 4: Identifying the determinants of demand. You have seen have how an increase in demand is depicted on a graph by a shift in the demand curve. When the demand curve shifts upward and to the right this is indicative of an increase in demand When the demand curve shifts to the left, this is indicative of a decrease in demand. Factors that result in a change in demand are the determinants of demand. Complete the table below. For each determinant of demand: indicate whether demand will increase or decrease provide an explanation as to why​

Answer 1

Population increase
• There will be an increase in demand as the population grows. This is because there are more individuals who are going to be consuming the economy’s goods.

Population decrease
• There will be a decrease in the demand and the population lessens. This is because there are less individuals who want to consume the economy’s goods.

Increase in most people’s income
• This will cause an increase in demand. This is because consumers income has risen so they can now afford to buy more of of the goods they normally purchase or they can buy new goods they don’t normally purchase. Due to this circumstance there will be an increase in demand

Decrease in most people’s income
• This will lead to a decrease in demand. Reason being is that consumers may no longer be able to afford certain goods and as such they will consume less of these goods causing demand d to decrease.

Price of substitute increases
• This will cause a decrease in demand. When there is a price decrease in a substituted good consumer will lessen their purchase and and aim to purchase more of a different good for the same satisfaction at a lower cost.

Price of substitute decrease
• Now that the price of the substitute decreases it will cause a surge in demand. This is because consumers can now afford this food and will change from a substitute to their normal good.

Price of complementary good increases
• This will cause a flux in demand. This is because when the price of a complementary good increases, consumer can no longer afford this good and will buy less of it. With the price of a complementary good increasing, the demand for the good that it complements will decrease as well.

Price of complementary good decrease
• This will cause a surge in demand. Consumers can now afford to buy a complementary good and will in turn buy the good that it complements as well.

Product becomes a popular fad
• This will cause a increase in demand as consumers shift their taste from one good to another.

Product now out of fashion
• This will cause a decrease in demand as this good is no longer trending. This will cause consumers to shift their want to a different more trendy good.


There is an expectation that the price of the good will soon fall.
• This will cause a decrease in demand. This is because consumers have the knowledge that the price of the good will soon fall, so they will not buy and of the good until the price of the good falls.

There is a fear that the economy will go into recession where many firms will fail and unemployment will increase.
• There will be an increase in demand. This is because consumers are fearing that they soon won’t be able to afford any good. Due to this circumstance they will buy a surplus of products and store it for these expected unfortunate times.


Hope this helps:)