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BITF19a024-Economics-Demand Practice

This document contains an economics assignment on the concept of demand. It includes 11 questions addressing the key determinants and representations of demand through demand curves and schedules. Specifically, it discusses how changes in factors like income, prices of substitutes and complements, and consumer tastes and preferences can cause the demand curve to shift left or right, indicating a decrease or increase in demanded quantity. It also provides examples of scenarios that result in movement along the demand curve versus a shift of the curve. The assignment aims to build understanding of microeconomic demand theory.

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Ahmad Nutt
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87 views5 pages

BITF19a024-Economics-Demand Practice

This document contains an economics assignment on the concept of demand. It includes 11 questions addressing the key determinants and representations of demand through demand curves and schedules. Specifically, it discusses how changes in factors like income, prices of substitutes and complements, and consumer tastes and preferences can cause the demand curve to shift left or right, indicating a decrease or increase in demanded quantity. It also provides examples of scenarios that result in movement along the demand curve versus a shift of the curve. The assignment aims to build understanding of microeconomic demand theory.

Uploaded by

Ahmad Nutt
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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2020

PUNJAB UNIVERSITY COLLEGE OF INFORMATION


TECHNOLOGY
ASSIGNMENT01

ECONOMICS
DEMAND PRACTICE
ATHEMATIC
Prepared for Miss. Madiha Saleem
By. Talha Mazhar Bitf19a024
DEMAND WORKSHEET

1. The law of demand states- when the price increases, the quantity demanded will. Decreases
When the price decreases, the quantity demanded will Increases.

2. If the federal government says that fish is healthy for you, the demand for fish will
(increase / decrease). Which determinant of demand causes this change? Govt Policies, health benefits, taste
& preference
Which way will the demand curve shift? (left / right) Draw the new demand curve- Label it D1.
P

D D1
Q

3. Economists announce that the unemployment rate will increase over the next six months.
The demand for new homes will (increase / decrease). Which determinant causes this change? Low income.
Which way will the demand curve shift? (left / right) Draw the new demand curve- Label it D2

D2 D
Q

4. The price of syrup used in making pancakes increases, the demand for pancakes will (decrease / increase).
Which determinant causes this change? Increase price in complementary goods.
Which way will the demand curve shift? (left / right) Draw the new demand curve- Label it D3.

D3 D
Q

5. The price of airline tickets goes up, the demand for train tickets will (increase).
Which determinant causes this change? Due to alternate things & substitute good. Which way will the
demand curve shift? (right) Draw the new demand curve-Label it D4.
P

D D4
Q
6. Provide a complement for the following items:
car-petrol bread-butter/ jam/ Nutella shoes-polish/shocks

7. Provide a substitute for the following items:


Car -bus/bike/auto (to some extent) pen - pencil/pointer/marker/ball pen/feather
Television – LED.

8. Using the demand schedule below, draw a demand curve.


Demand Schedule P
Price Quantity
$6.00 6 6
$5.00 6 5
$4.00 6 4
$3.00 6 3 Q

9. Plot the points for the demand curve and label the line D1.
Demand Schedule #1 P
Price Quantity 9
$9.00 1 8
$6.00 3 7
$5.00 4 6
$2.00 6 5
$1.00 7 4
3
2 D1 D2
10. 1 Q
Demand Schedule #2 0 1 2 3 4 5 6 7 8 9
Price Quantity
$9.00 3
$8.00 4 Use the graph above, plot the points for the new demand curve and
$5.00 6 label it D2
$4.00 7
$1.00 9

11. Does a shift from D1 to D2 reflect an increase or a decrease in demand?


Increase in demand.

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.

Determinant of demand Demand Explanation


increases or
decreases?
Population increases Increase More & more births cause more &
more necessities

Population decreases decrease Less births less necessities

Increase in most peoples’ income increase As income increase people choice


luxuries and demand increase.

Decrease in most peoples’ income Decrease As income decrease people decrease.

Price of substitute increases increase Because demand increase as price of


substitute good increase.

Price of substitute decreases decrease Because demand decrease as price of


substitute good decrease.

Price of complementary good Decrease Because demand decrease as price of


increases complimentary good increase.

Price of complimentary good Increase Because demand increase as price of


decreases complimentary good decrease.

Product becomes a popular fad Increase People prefer these products


(change in taste of buyers)
Product now out of fashion Decrease People don’t prefer, and buy in
(change in taste of buyers) fashion products.
There is an expectation that the Decrease
price of the product will soon fall
There is a fear that the economy May be both Some people prefer savings of
will go down where many firms income & some people prefer
will fail and unemployment will purchasing & hoarding.
increase
Movement along the curve or a shift in the demand curve? Complete the table below by indicating
whether each scenario results in a change in the quantity demanded (movement along the demand curve), or
a change in demand (shift in the demand curve). If there is a shift in the demand curve, indicate whether the
curve shifts up or down.

Scenario Movement or shift up or


shift down?
1. There is an outbreak of the flu and sales of latex Shift down
gloves skyrocket.
2. A nail salon cuts the price it charges for manicures and Shift down
more clients come.
3. A chain of department stores extends the hours that Shift down
stores will remain open and total sales for the chain has
increased.
4. The US Census Bureau has announced that there is Shift down
baby boom in the United States and sales of baby
carriages have increased.
5. John’s Bicycle shop increases the prices of bicycles Shift up
and sales decrease.
6. The City of New York has cut the number of city Shift up
employees by 10% and sales of big screen televisions
falls.

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