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CIPS Exam L4M5 Topic 14 Question 67 Discussion
Topic #: 14
Which of the following are factors that might shift the demand curve for a consumer good to the right?
1. Prices of complementary goods decrease
2. Price of the consumer good decreases
3. Customers' expectation of higher prices in the future
4. Consumer tastes shift toward substitute products
A shift in demand occurs when an influencing factor other than price changes. Those factors are:
- The income of buyers
- The tastes and preferences of buyers
- The prices of other goods and services, especially substitutes and complements
- Expectations of buyer about the future
In this question:
- 'Prices
of complementary goods decrease' will lead to quantity demanded for that complements rising, then demand for consumer good will increase accordingly.
- 'Price of the consumer good decreases' will increase the quantity demanded for that good, but it will not shift the demand curve
- 'Customers' expectation of higher prices in the future': in this scenario, customers tend to buy more to store in present, which leads to demand curve shifting to the right
- 'Consumer tastes shift toward substitute products': Demand for substitutes will rise, so demand for that consumer good will decrease and the demand curve shifts to the left.
LO 2, AC 2.2
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