Edexcel A Level Business 1.2 The Market

What effect does a rise in the price of a substitute good generally have on demand for the original good?

• It increases demand for the original good

• It decreases demand for the original good

• It has no effect on demand

• It lowers the price of the original good

What impact does a rise in consumer income have on the demand for normal goods?

• It increases demand

• It decreases demand

• It has no effect on demand

• It makes the demand perfectly elastic

How do changes in fashion and consumer tastes generally affect demand?

• They always decrease demand

• They have no impact on demand

• They can increase or decrease demand depending on trends

• They only affect the price, not demand

Which of the following is a key role of advertising in relation to demand?

• It reduces supply

• It increases consumer demand by raising awareness

• It reduces demand for complementary goods

• It has no impact on consumer preferences

How do demographic changes influence demand?

• They primarily affect the supply side of the market

• They only affect luxury goods

• They can shift demand based on changes in population size and structure

• They decrease demand for all goods

What are external shocks in the context of demand?

• Events that only impact consumer supply

• Unexpected events that significantly alter demand

• Predictable factors that influence prices

• Seasonal changes that reduce demand

Which of the following is an example of seasonality affecting demand?

• Increase in ice cream sales during the summer

• Stable sales of household cleaning products throughout the year

• Fall in demand for smartphones in winter

• Decreased demand for umbrellas in rainy seasons

What happens to the supply of a product if the cost of production decreases?

• Supply increases

• Supply decreases

• Supply remains unchanged

• Supply becomes perfectly inelastic

How does the introduction of new technology typically affect supply?

• It reduces supply by increasing production costs

• It increases supply by improving production efficiency

• It makes the supply curve vertical

• It decreases demand

What effect do indirect taxes generally have on supply?

• They increase supply

• They decrease supply by raising production costs

• They have no impact on supply

• They only affect demand