IGCSE Economics-Revision-Microeconomics-Supply and Demand

Will lead to a shift of the supply curve...

• Change in costs of production

• Change in firm's reputation

• Change in consumer preferences

Answer explanation

A change in costs of production directly affects the supply curve by altering the quantity suppliers are willing to produce at various prices, leading to a shift. Other options impact demand or perception, not supply.

Will lead to a shift of the demand curve...

• Change in costs of production

• Change in firm's reputation

• Change in taxes

• Change in international tariffs

Answer explanation

A change in a firm's reputation can shift the demand curve as it affects consumer perception and willingness to buy. Unlike costs, taxes, or tariffs, reputation directly influences demand for a product.

Will lead to a change along the demand curve

• Change in prices

• Change in firm's reputation

• Change in consumer preferences

Answer explanation

A change in prices directly affects the quantity demanded, leading to movement along the demand curve. In contrast, changes in reputation or consumer preferences shift the entire curve, not just movement along it.

Will lead to a change along the supply curve

• Change in prices

• Change in costs of production

• Change in taxes

• Change in international tariffs

Answer explanation

A change in prices leads to a movement along the supply curve, reflecting how quantity supplied changes with price. Other options, like costs of production or taxes, shift the entire supply curve, not just cause movement along it.

The supply curve shows

• The amount of goods or services that are supplied at a given market price.

• The amount of goods or services that are consumed at a given market price.

• The amount of goods or services that are supplied at a given quantity.

Answer explanation

The supply curve illustrates the relationship between the price of a good and the quantity supplied. It specifically shows how much of a good or service is supplied at various market prices, making the first choice correct.

The demand curve shows

• The amount of goods or services that are consumed at a given market price.

• The amount of goods or services that are supplied at a given market price.

• The amount of goods or services that are consumed at a given quantity.

Answer explanation

The demand curve illustrates the relationship between price and quantity demanded, showing how much of a good or service is consumed at a specific market price, making the first choice the correct answer.

The law of demand says that

• at higher prices, buyers will demand less of an economic good.

• at higher prices, buyers will demand more of an economic good.

• at higher prices, sellers will supply more of an economic good.

• at higher prices, sellers will supply less of an economic good.

Answer explanation

The law of demand states that as prices increase, the quantity demanded by buyers decreases. Therefore, at higher prices, buyers will demand less of an economic good, making the first answer choice correct.

The law of supply says that at higher prices,

• sellers will supply more of an economic good.

• sellers will supply less of an economic good.

• buyers will demand less of an economic good.

• buyers will demand more of an economic good.

Answer explanation

The law of supply states that as prices increase, sellers are incentivized to supply more of an economic good to maximize profits. Therefore, at higher prices, sellers will supply more.

The demand curve is

• downward sloping

• upward sloping

Answer explanation

The demand curve is downward sloping because as the price of a good decreases, the quantity demanded increases, reflecting the inverse relationship between price and quantity demanded.

The supply curve is

• downward sloping

• upward sloping

Answer explanation

The supply curve is upward sloping because as the price of a good increases, producers are willing to supply more of it. This reflects the direct relationship between price and quantity supplied.