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NUR DIANA BINTI AZNI
0314923

QUESTION 1:NEWSPAPER ARTICLE REVIEW

a)

A change in demand is a shift of the demand curve to the right or to the left. It occurs because the consumer’s state of mind about purchasing the product has been altered in response to a change in one or more of the determinants of demand. Demand curve shifts to the right when :

Price of substitute good increases
Price of complement goods decreases
Expected future price increases
Income decreases (normal goods)
Number of buyers increase

Demand curve shifts to the left when :
Price of substitute goods decreases
Price of complement goods increases
Expected future price decreases
Income decreases (normal goods)
Number of buyers decrease

A change in quantity demanded is a movement from one point to another point – from one price-quantity combination to another – on a fixed demand curve. The cause of such a change is an increase or decrease in the price of the product under consideration.

b) Explain and illustrate how price of goods increases during the festive season.(6 marks)

During the festive seasons, normally all different products tend to be high in demand. This is because they tend to have celebrations among themselves therefore they need to buy and have more food for the celebration. Hence, the price of food products will automatically increases. This determine the determinants of supply which is resource prices. The price of resources used in the production process help determine the costs of production incurred by firms. However, during festive seasons is where the producers will increase the price of goods they sell and at the same time they will reduce the supply for their goods.

c) Based on the article above, is the government setting maximum price or minimum price? Why do the government establish the price control?

Based on the article above, the government setting a maximum price or in the economic term it is called Price...
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