CIPS Exam L4M5 Topic 14 Question 67 Discussion

Actual exam question for CIPS's L4M5 exam

Question #: 67
Topic #: 14

[All L4M5 Questions]

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

A3 and 4 only

B4 and 2 only

C1 and 3 only

D1 and 2 only

Show Suggested Answer

Suggested Answer: C

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

by Dorothea at Aug 22, 2024, 05:12 PM

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Terry

2 months ago

Yeah, Karma's strategy might work for multiple-choice trivia, but not for economics exams. Gotta think this through logically.

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Selma

25 days ago

Oh, I see. So it's not just about memorizing, but understanding the logic behind it.

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Blair

26 days ago

You're right, that would shift the demand curve to the right as well. So it should be D) 1 and 2 only.

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Kathrine

1 months ago

But what about when the price of the consumer good decreases? Wouldn't that also shift the demand curve to the right?

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Mable

1 months ago

A) 3 and 4 only

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Karma

3 months ago

Haha, I was just gonna choose the one with the most options, but I guess that's not the way to go here. Good thing I have you guys to bounce this off of!

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Alex

2 months ago

Yeah, that makes sense. So it's not always about choosing the most options, you have to think about how each factor affects demand.

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Chau

2 months ago

I think it's A too, because if customers expect higher prices in the future and their tastes shift towards substitute products, then demand would increase.

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Evangelina

2 months ago

A) 3 and 4 only

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Catrice

3 months ago

You're right, I didn't consider that. So the answer could be D) 1 and 2 only.

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Ryan

3 months ago

But if the price of the consumer good decreases, wouldn't that also shift the demand curve to the right?

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Catrice

3 months ago

I disagree, I believe the answer is B) 4 and 2 only.

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Alecia

3 months ago

Hmm, I was leaning towards option B, but I think Veta and Kent have a point. The demand curve would shift right with those factors.

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Kent

3 months ago

I agree with Veta. Factors that increase demand, like complementary good prices and future price expectations, are the right answer here.

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Viola

3 months ago

I agree, factors like complementary good prices and future price expectations can definitely shift the demand curve to the right.

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Viola

3 months ago

I think the correct answer is C) 1 and 3 only.

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Ryan

3 months ago

I think the answer is A) 3 and 4 only.

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Veta

4 months ago

Option C seems like the correct answer. Prices of complementary goods and customers' expectations of higher future prices would both shift the demand curve to the right.

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Karma

2 months ago

It makes sense, those are key factors that can impact demand for a product.

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Selma

3 months ago

I agree, those factors would definitely increase demand for the consumer good.

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Rose

3 months ago

I think option C is correct. Prices of complementary goods and customers' expectations of higher future prices would both shift the demand curve to the right.

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