Demand (DP IB Economics: HL)

Exam Questions

18 mins8 questions
12 marks

Case Study

Text A, Paragraph 2

In response to a drop in smartphone prices, the USA saw a significant increase in sales during the holiday season. Consumers were quick to take advantage of the lower prices, leading to long queues at electronic stores. This highlights the relationship between price and quantity demanded.

Define the term quantity demanded indicated in bold (Text A, Paragraph 2).

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23 marks

Case Study

Text A, Paragraph 2

In 2024, widespread research linking excessive sugar consumption to serious health problems led to an increase in public health campaigns across Canada. These campaigns, coupled with rising consumer awareness, have significantly reduced the demand for sugary soft drinks, as more consumers are turning towards healthier alternatives. The soft drink industry has faced declining sales, especially in urban areas where the campaigns are most prominent.

Draw a diagram showing the effect of rising health concerns on the demand for soft drinks in Canada (Text A, Paragraph 2).

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32 marks

Case Study

Text G, Paragraph 1

Following a sharp rise in petrol prices, many commuters in Manchester have switched to public transportation, reducing their reliance on personal vehicles. This shift is an example of how the income effect can influence consumer choices.

Define the income effect indicated in bold (Text G, Paragraph 1).

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42 marks

Case Study

Text E, Paragraph 2

In China, a sharp increase in consumer incomes has led to greater spending on luxury goods such as designer clothing and high-end electronics. This increase in real income has shifted the demand curve for luxury items to the right.

Define the term real income indicated in bold (Text E, Paragraph 2).

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52 marks

Case Study

Text C, Paragraph 2

The popularity of organic food products has increased rapidly in recent years, leading to a rightward shift in the demand curve for organic fruits and vegetables. This shift has occurred even though the prices of these products have remained relatively stable.

State two non-price determinants of demand that can shift the demand curve indicated in bold (Text C, Paragraph 2).

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63 marks

Case Study

Text A, Paragraph 1

In 2024, a major sporting event was held in Argentina, attracting millions of tourists from around the world. In anticipation of the event, the government launched a large-scale campaign promoting tourism and offering incentives such as discounted flights and accommodation. As a result, the demand for hotel bookings and tourist services surged in key cities like Buenos Aires and Mendoza.

Draw a diagram showing the effect of the government's promotional campaign on the demand for hotel bookings in Argentina (Text A, Paragraph 1).

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72 marks

Case Study

Text D, Paragraph 3

During the winter months, demand for heating oil tends to rise in northern countries. However, due to stable prices, the increase in demand is attributed mostly to seasonal needs.

Apart from seasonal needs, state two factors that could increase the demand for heating oil in northern countries (Text D, Paragraph 3).

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82 marks

Outline two assumptions underlying the law of demand.

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