IGCSE ECONOMICS

Worksheet-5
CH 7: DEMAND AND SUPPLY CURVES
Q.No Questions
1. What is the definition of effective demand?
A demand that is speculative
B demand that is supported by the ability to pay
C the relationship between price and quantity demanded
D the total amount demanded by consumers
2 Butter is a normal good. It is in joint demand with bread and in joint supply with
buttermilk. The demand for butter increases because of a rise in consumer
incomes.
What are the effects of this increase on the prices of bread and buttermilk?

3 Good P and good Q are substitutes. There is a decrease in supply of good P because
of a shortage of materials. Which row describes what will happen to demand?

4 The pressure to reduce the use of fossil fuels has led to oil companies reducing the
level of investment in the exploration of new reserves. What will be the long-run
effect of such a policy on the market for oil?
5 A change in the price of a good causes an increase in the quantity of the good
demanded. What would be the nature of the good and the direction of price change
for this to be certain to happen?

6 With the help of a diagram, explain what could cause an increase in demand for a
product and consider whether the impact of an increase in demand on the price of
the product will be the same in the short run and the long run. (8 marks), NOV 2023
AO1 Knowledge and understanding (max 3 marks) An understanding of the
demand for a product, shown through an accurate diagram, with correctly labelled
axes (1), correctly labelled demand and supply curves and a correctly labelled shift
of the demand curve to the right (1) and with equilibrium positions in terms of both
price and quantity clearly shown or a movement from E1 to E2. (1)
AO2 Analysis (max 3 marks) Uses the diagram to explain what could cause a shift
of the demand curve to the right for a product and analyses the causes of an
increase in demand for a product.
AO3 Evaluation (max 2 marks) Offers a valid judgement on whether the impact of
an increase in demand on the price of the product will be the same in the short run
and long run (1) to reach a conclusion. (1)
7 Using a demand curve, state the difference between Change in Demand and
Change in Quantity demand. Discuss the various possibilities that occurs in both
cases of Change in Demand and Change in Quantity demanded
8 Discuss the non-price determinants of Demand and supply separately.
9 How will the following changes affect the demand curve? (Use diagrams)

a) Demand for coffee when Price of Tea falls

b) Demand for Coca-Cola when Price of Pepsi rises
c) Fall in price of computers and demand for computer software
 d) Number of consumers in market for Product A increases
e) Consumer’s income increases and product A is an inferior good
f) Consumer’s Income decreases and product A is a normal good
g) A news report claims that use of a product A is harmful to health
10 When will a supply curve become vertical? Can you think of some real-life examples
for such a case. Discuss.
11 Use diagram and analysis to discuss the difference between a movement along the
supply curve and shifts in the supply curve.
12 How will the following factors affect the supply of a product?
a) A significant increase in the price of crude oil
b) Advancements in manufacturing technology
c) Subsidies to farmers
d) A drought in a major wheat-producing region
e) If farmers expect coffee prices to rise in the future
f) Imposing tariffs on steel imports
g) Depletion of oil reserves