Non-Price Factors Affecting Demand

Is an example of a non-price factor affecting demand.

• A decrease in the price of concert tickets

• A successful advertising campaign for a new sneaker brand

• A store offering a "buy one, get one free" discount

• A rise in petrol prices affecting car sales

Answer explanation

A successful advertising campaign for a new sneaker brand influences consumer preferences, thus affecting demand without changing price. Similarly, a rise in petrol prices impacts car sales by altering consumer behavior.

If a product becomes trendy on social media, what happens to its demand?

• Demand decreases because only a few people follow trends

• Demand increases, shifting the demand curve to the right

• Demand remains unchanged unless the price drops

• emand decreases because trends do not affect purchasing decisions

Answer explanation

When a product becomes trendy on social media, more people want to buy it, leading to an increase in demand. This causes the demand curve to shift to the right, indicating higher demand at the same price.

Which of these situations would likely decrease the demand for coffee?

• The price of coffee beans decreases

• A new study links coffee consumption to health risks

• Tea prices fall, making it a cheaper alternative

• A new advertising campaign promotes coffee’s health benefits

Answer explanation

A new study linking coffee to health risks would likely deter consumers, reducing demand. Additionally, falling tea prices make it a more attractive alternative, further decreasing coffee demand.

How does an increase in population size affect demand?

• It has no effect unless prices change

• It shifts the demand curve to the left

• It shifts the demand curve to the right

• It only affects the demand for luxury goods

Answer explanation

An increase in population size typically leads to higher demand for goods and services, shifting the demand curve to the right. This indicates that at every price level, consumers are willing to purchase more.

Which of the following is an example of a complementary good?

• Laptops and software

• Bread and butter

• Cars and petrol

• All of the above

Answer explanation

Complementary goods are products that are used together. Laptops and software, bread and butter, and cars and petrol all illustrate this relationship, making 'All of the above' the correct answer.

If consumer incomes rise, what is most likely to happen to the demand for luxury watches?

• Demand will increase

• Demand will decrease

• Demand will stay the same

• Demand will only change if the price of watches changes

Answer explanation

As consumer incomes rise, people are more likely to purchase luxury items, including luxury watches. This increase in purchasing power typically leads to an increase in demand for luxury goods.

The demand for public transport is likely to increase if:

• Petrol prices rise

• Car prices drop

• More people start working from home

• New government policies make public transport free

Answer explanation

The demand for public transport increases when petrol prices rise, as people seek cheaper alternatives. Additionally, if public transport becomes free due to new government policies, it will further boost demand.

If an earthquake destroys a city’s factories, what will happen to demand in that city?

• Demand will shift to the right

• Demand will shift to the left

• Demand will stay the same

• Prices will drop, increasing demand

Answer explanation

When an earthquake destroys factories, production decreases, leading to a reduction in the supply of goods. This causes demand to shift to the left, as consumers have less access to products and may reduce their spending.

A fall in the price of PlayStation consoles will most likely

• Increase the demand for PlayStation games

• Decrease the demand for PlayStation controllers

• Shift the PlayStation demand curve to the left

• Have no effect on demand for related products

Answer explanation

A fall in the price of PlayStation consoles makes them more accessible, leading to increased sales. This typically boosts the demand for PlayStation games, as more consoles in use means more potential customers for the games.

Why do companies invest in advertising if they can just lower prices to sell more?

• Lower prices always lead to lower profits

• Advertising can increase demand without reducing prices

• Advertising has no effect on consumer demand

• Only expensive products benefit from advertising

Answer explanation

Companies invest in advertising because it can increase consumer demand without the need to lower prices. This strategy helps maintain profit margins while attracting more customers.