CH # DEMAND

0455/23/M/J/23 The number of Chinese

restaurants in the UK fell by
approximately 7% in 2020 compared to
the year before. Reasons for this include
falling demand for Chinese food and
increasing competition from other types
of food. Some small firms selling
Chinese food are also unwilling to invest
in the latest technology because of the
possible opportunity costs. c) Analyse
two causes of a fall in demand for a
product such as Chinese food. [6]
Answer
A fall in demand for a product like Chinese food
can be caused by several factors. Two key
reasons include:

1. Changes in Consumer Preferences

Consumers' tastes and preferences are dynamic
and can shift for various reasons, such as:
● Changing dietary habits: An increasing
focus on health-conscious eating or dietary
trends, such as veganism or low-carb diets,
may lead to a decline in the consumption of
Chinese food if it is perceived as unhealthy
or high in calories.
● Cultural influence: Exposure to other
cuisines or trends in fusion foods can divert
demand away from traditional Chinese food
to other options, such as Mexican,
Japanese, or plant-based alternatives.
This leads to a decrease in demand as
consumers choose substitutes they find more
appealing, ultimately reducing sales for Chinese
food businesses.

2. Increase in Competition
Competition from other cuisines or dining
options can also lead to a fall in demand for
Chinese food.
 ● Entry of new competitors: A rise in
restaurants offering other international
cuisines or fast food may attract customers
who would have otherwise chosen Chinese
food.
● Convenience factors: The popularity of
delivery-focused services or ready-made
meal kits might divert demand to faster,
cheaper, or more accessible alternatives.
As more options become available, consumer
spending is spread across various types of food,
diminishing demand for traditional Chinese
restaurants.

By affecting consumer choices or drawing them

toward substitutes, both changes in preferences
and increased competition can significantly
lower the demand for Chinese food.

0455/21/M/J/22
In 2019, 70% of Swedish workers were
members of a trade union. More than 85% of
Swedish workers are employed in the tertiary
sector, compared with only 2% in the primary
sector. Swedish workers spend their incomes
on a variety of products some of which, e.g.
sweets, are demerit goods. Sweden has the
7th highest per head consumption of sweets
in the world.

a) Identify two influences on what products a

person buys. [2]

Answer
Two influences on what products a person buys
are:
1.Income level: A person's income
determines their purchasing power,
influencing the variety and quantity of
products they can afford. Higher incomes
enable the purchase of luxury or
non-essential goods, while lower incomes
restrict spending to necessities.

2.Personal preferences and tastes:

Individual preferences, influenced by factors
such as culture, lifestyle, and advertising,
 play a significant role in determining the
types of products a person chooses to buy.
For example, a preference for sweets might
lead to higher spending on confectionery.

0455/23/M/J/21
Global spending on the health sector, by both
the private and public sectors, is the highest
compared with all other sectors including
education and defence. Investment in
education and the health sector has resulted
in new life-saving technology being
introduced. However, demand for certain
vaccinations has decreased over the years,
shifting the demand curve of vaccinations to
the left.

b) Explain two causes of a shift of a product’s

demand curve to the left. [4]

Answer
A leftward shift of a product's demand curve
indicates a decrease in demand at every price
level. Two possible causes are:

1. Changes in Consumer Preferences

● If consumers lose interest in or develop
negative perceptions of a product, demand
will fall.
● For example, decreasing trust in the safety
or effectiveness of certain vaccinations due
to misinformation or fear of side effects can
discourage people from getting vaccinated,
causing demand to drop.

2. Availability of Substitutes
● The introduction of alternative products that
consumers perceive as more effective,
convenient, or affordable reduces the
demand for the original product.
● For instance, if new treatments or alternative
preventative measures are developed, they
may replace the need for specific
 vaccinations, shifting the demand curve for
those vaccinations to the left.

These factors reduce consumers' willingness or

ability to purchase the product, decreasing
demand overall.

Answer
A rightward shift in the demand curve for fish
indicates an increase in demand at every price
level. Two possible causes are:

1. Changes in Consumer Preferences

● An increased preference for fish due to its
health benefits, such as being a source of
protein and omega-3 fatty acids, can lead to
higher demand.
● For example, if more people adopt healthy
diets or follow trends like pescatarianism,
they may consume more fish, causing the
demand curve to shift right.
2. Increase in Population or Income
Levels
● A growing population or rising incomes can
lead to higher overall consumption of fish.
● For instance, in countries experiencing
economic growth, people might spend more
on high-quality protein sources like fish as
their purchasing power increases.

Both factors increase the willingness and ability

of consumers to purchase fish, thereby shifting
the demand curve to the right.

Answer
The terms "extension in demand" and "increase
in demand" describe different movements on the
demand curve:

1. Extension in Demand
● An extension in demand refers to a
movement along the demand curve due to
a decrease in the price of a product.
 ● When the price falls, consumers are willing
and able to buy more of the product, leading
to higher quantity demanded.
● For example, if the price of chips decreases,
more consumers may purchase them,
resulting in an extension of demand.

2. Increase in Demand
● An increase in demand refers to a shift of
the entire demand curve to the right,
meaning more of the product is demanded
at all price levels.
● This shift can result from factors such as
higher incomes, changes in consumer
preferences, or population growth.
● For instance, if Hungarians develop a
stronger preference for chips, demand will
increase regardless of price.

Key Difference
● Extension in demand is caused by a price
change and is movement along the curve.
 ● Increase in demand is caused by non-price
factors and is a shift of the demand curve.

Answer
The terms "extension in demand" and "increase
in demand" describe different movements on the
demand curve:

1. Extension in Demand
● An extension in demand refers to a
movement along the demand curve due to
a decrease in the price of a product.
● When the price falls, consumers are willing
and able to buy more of the product, leading
to higher quantity demanded.
● For example, if the price of chips decreases,
more consumers may purchase them,
resulting in an extension of demand.

2. Increase in Demand
● An increase in demand refers to a shift of
the entire demand curve to the right,
 meaning more of the product is demanded
at all price levels.
● This shift can result from factors such as
higher incomes, changes in consumer
preferences, or population growth.
● For instance, if Hungarians develop a
stronger preference for chips, demand will
increase regardless of price.

Key Difference
● Extension in demand is caused by a price
change and is movement along the curve.
● Increase in demand is caused by non-price
factors and is a shift of the demand curve.

0455/23/M/J/20
There is a high level of division of labour in
the United Kingdom (UK) energy industry.
Cold weather in early 2018 caused very high
demand for energy and a change in its price.
This led to a temporary shortage of energy for
firms and households in the UK. Part of the
change in price may have been the result of
UK energy firms abusing their monopoly
power. This would be an example of market
failure.

b) Explain two influences, other than weather,

that could affect the demand for a product. [4]

Answer
Two influences, other than weather, that could
affect the demand for a product are:

1. Changes in Income Levels

● When consumers' incomes rise, they have
greater purchasing power, leading to
increased demand for normal goods.
Conversely, a fall in income can reduce
demand for such goods.
● For example, in the energy industry, higher
incomes may encourage greater use of
heating and appliances, increasing energy
demand.
2. Price of Substitutes or Complements
● Substitutes: If the price of a substitute
product decreases, demand for the original
product may fall as consumers switch to the
cheaper alternative. For instance, if
renewable energy sources like solar
become cheaper, demand for traditional
energy sources like gas may decrease.
● Complements: If the price of
complementary products rises, demand for
the related product may decrease. For
example, if the cost of energy-dependent
appliances increases, households may
reduce their energy consumption.

These factors influence consumers' willingness

and ability to purchase a product, leading to
changes in demand.

0455/22/M/J/18
In October 2015, the Chinese government
switched from its one child policy to a two
child policy partly because of the challenges
caused by an ageing population. The birth
rate was falling anyway due to rising female
participation in the labour force, improvements
in education, later marriages and the rapidly
rising price of housing.

b) Explain why the price of housing may

increase. [4]

Answer
The price of housing may increase due to the
following factors:

1. Increase in Demand for Housing

● Population growth: An increase in the
population, particularly in urban areas, leads
to higher demand for housing as more
people need places to live.
● Rising incomes: Higher income levels
enable more people to afford housing,
increasing demand and driving up prices.
 ● Cultural preferences: In some societies,
owning a home is seen as a status symbol,
further increasing demand.

2. Decrease in Supply of Housing

● Land scarcity: Limited availability of land
for building new homes, especially in urban
areas, restricts the supply of housing.
● Higher construction costs: Rising costs of
materials or labor can deter construction,
reducing the number of new houses built.
● Regulations: Strict zoning laws or building
regulations may also limit the number of
houses that can be constructed, leading to a
constrained supply.

When demand increases or supply decreases,

or both occur simultaneously, the price of
housing rises due to market forces.

0455/22/M/J/18
In the UK, bus journeys outside London have
fallen by nearly 40% since 1980. This fall in
demand has been largely due to a rise in bus
fares, a rise in income and changes in the
price and quality of substitutes. On some
routes there are monopolies operating and
this lack of competition can push up the price.

a) Define a substitute and give an example.

[2]

Answer

A substitute is a good or service

that can be used in place of another
to satisfy the same need or want. If
the price of one increases, the
demand for its substitute is likely to
rise.
Example: Trains are substitutes for
buses, as both are modes of public
transport. If bus fares increase,
more people may opt to travel by
train.

BY : HUSSAIN JAVED