ASSESSMENT FOR DEMAND AND DEMAND CURVE

I. Consider the markets for DVD movies, TV screens, and tickets at movie theatres.
a. For each pair, identify whether they are complements or substitutes:
 DVDs and TV screens - Complements
 DVDs and movie tickets - Substitutes
 TV screens and movie tickets - Substitutes

II. Based on our discussions and the material, answer the following questions.

1. The law of demand states- when the price increases, the quantity demanded will decrease. When the
price decreases, the quantity demanded will increase.

2. If a change in price has an effect on the change in quantity, this is known as (elastic / inelastic) demand.
Give a specific example of this type of demand.

- It is elastic demand. For example, If Kit Kats price increases, people will switch to alternative types of
a chocolate bar and the quantity demanded will decrease.

3. If the federal government says that fish is healthy for you, the demand for fish will (increase /
decrease).

- If the federal government says that fish is healthy, the demand for fish will increase.

Which way will the demand curve shift? (left / right) Draw the new demand curve- Label it D1.

D1
D

Q
3. Economists announce that the unemployment rate will increase over the next six months.
The demand for new homes will (increase / decrease). Which way will the demand curve shift?
(left / right) Draw the new demand curve- Label it D2

D
D2

4. The price of syrup increases, the demand for pancakes will (increase / decrease).
Which way will the demand curve shift? (left / right) Draw the new demand curve- Label it D3.

D
D3

5. The price of airline tickets goes up, the demand for train tickets will (increase / decrease).
Which way will the demand curve shift? (left / right) Draw the new demand curve-Label it D4.

D4
D

Q
 III. MOVEMENT ALONG THE CURVE OR A SHIFT IN THE DEMAND CURVE
Movement along the curve or a shift in the demand curve? Complete the table below by
indicating whether each scenario results in a change in the quantity demanded (movement
along the demand curve), or a change in demand (shift in the demand curve). If there is a shift
in the demand curve, indicate whether the curve shifts up or down.

Scenario Movement or shift up or shift

down?
1. There is an outbreak of the flu and sales of latex gloves Shift up
skyrocket.
2. A nail salon cuts the price it charges for manicures and Movement
more clients come.
3. A chain of department stores extends the hours that stores Shift up
will remain open and total sales for the chain has increased.

4. The US Census Bureau has announced that there is a baby Shift up

boom in the United States and sales of baby carriages have
increased.
5. John’s Bicycle shop increases the prices of bicycles and Movement
sales decrease.

IV. DEMAND TABLE FOR SIOPAO

Price (in Peso) Maria Juan Pedro Market Demand

2 4 36 24 64
4 4 32 20 56
6 1 28 16 45
8 0 24 12 36
10 0 20 8 28
 12 0 16 4 20
14 0 12 0 12
16 0 8 0 8

B. Graph the market demand curves.

MARKET DEMAND CURVE OF SIOPAO

In your own words, state the relationship between demand and price
= The demand and price affect each other in accordance with the law of demand. The law of demand is a
general relationship between price and consumption. When the price of a good rises, the quality demanded
will fall. The quality of the good demanded per period of time will fall as price rises and will rise as price falls,
other things being equal. This indicates the inverse relationship of the price and the quantity demanded. The
effect in the quantity demanded will also affect the demand.

VI. ORIGINAL AND NEW QUANTITY DEMAND

Price of Biscuit (in Peso) Original quantity New quantity demanded per
demanded per week week (thousands)
(thousands)
2.50 100 130
 2.25 110 140
2.00 120 150
1.75 130 160
1.50 140 170
1.25 150 180
1 160 190
.74 170 200
.50 180 210
.25 190 220

Task

1. Graph the original quantity and the new quantity demand curves on the same graph. Use D O for
the Original quantity demanded and D1for the new quantity demanded.

2. In your own words, explain the difference between a change in demand and a change in quantity
demanded.
= Change in quantity demanded pertains to change in the quantity purchased due to increase or
decrease in the price of a product. A change in quantity demanded indicates movement along the
demand curve, which is caused only by a change in price. Change in demand, on the other hand,
focuses on all determinants of demand other than price changes. It also refers to a shift in the entire
demand curve, which is caused by a variety of factors such as preferences, income and prices of
substitutes and complements.