Demand and Supply

In the market for iPhones there is an increase in the price of glass. This will cause:

• A favourable shift in supply

• A favourable shift in demand

• No effect

• A favourable shift in both demand and supply

Answer explanation

Glass is used to make an iPhone, therefore it can only cause a shift in supply.

The price of Samsung phones has just decreased. What effect does this have on the market for iPhones?

• A favourable shift in supply

• An unfavourable shift in supply

• A favourable shift in demand

• An unfavourable shift in demand

Answer explanation

Samsung is the competitor (substitute) for iPhones, hence a decrease in price will cause some consumers to shift towards Samsung devices, away from iPhones.

If there is a wage increase for all workers in manufacturing, what is the effect on the iPhone market?

• Favourable shift in supply

• Unfavourable shift in supply

• Favourable shift in demand

• Unfavourable shift in demand

Answer explanation

Wages are a cost of production and therefore a supply factor.

The firm has found a new method of production which helps lower the costs of production. What effect does this have on the iPhone market?

• Favourable shift in supply

• Unfavourable shift in supply

• Favourable shift in demand

• Unfavourable shift in demand

There has been some advice that iPhones are more secure from hacking than other phones. What effect will this have on the iPhone market?

• Favourable shift in supply

• Unfavourable shift in supply

• Favourable shift in demand

• Unfavourable shift in demand

The price of iPhone charging cords has increased. What effect will this have on the iPhone market?

• Favourable shift in supply

• Unfavourable shift in supply

• Favourable shift in demand

• Unfavourable shift in demand

The demand curve shows that:

• The higher the price of a product, the more consumers want it

• The lower the price of a product, the more consumers want it

• The higher the price of the product, the more firms want to produce it

• The higher the price of the product, the less firms want to produce it

The supply curve shows:

• The higher the price of a product, the more consumers want it

• The higher the price of a product, the less consumers want it

• The higher the price of a product, the more firms want to produce it

• The higher the price of a product, the less firms want to produce it

At equilibrium, which of the following is true?

• Demand equals supply

• There is neither a surplus or a shortage of the product

• Ceteris paribus, the price of the product will not change

• All of the other answers