1.3.1 Determinants of Demand — Practice Questions

Seven original multiple-choice questions on the determinants of demand, written to the style and difficulty of AQA Paper 3 Section A. One asks you to sketch the diagram yourself. Every question carries a full worked model answer.

7 questions AQA A-Level Multiple choice Model answers included

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1. 1. The price of a good falls and the quantity demanded of it rises. On a demand diagram this is shown as

   Definition in context

   Select one answer

   A A movement along the demand curve.

   B A shift of the demand curve to the left.

   C A shift of the demand curve to the right.

   D A shift of the supply curve to the right.
   Show model answer

   Answer: A (A movement along the demand curve.). The demand curve is drawn for a given set of conditions, with price on one axis and quantity demanded on the other. A change in the good's own price is therefore already represented by the curve: you simply read off a different point on it. That is a movement along the curve, often called an extension of demand when quantity rises.

   Why the other options are wrong

   • B — A leftward shift means less is demanded at every price, which is caused by a change in one of the conditions of demand — incomes, tastes, the price of a substitute — not by the good's own price.
   • C — A rightward shift also requires a change in a condition of demand. Nothing in the stem has changed except the price, so the curve stays where it is.
   • D — The supply curve is a separate relationship. A fall in price might have been caused by a supply shift, but the demand-side response is still a movement along the demand curve.

2. 2. Which one of the following would cause the demand curve for cinema tickets to shift to the right?

   Applied reasoning

   Select one answer

   A A fall in the price of cinema tickets.

   B A fall in the price of streaming subscriptions, a close substitute.

   C A rise in consumer incomes, if cinema visits are a normal good.

   D A rise in the price of cinema tickets.
   Show model answer

   Answer: C (A rise in consumer incomes, if cinema visits are a normal good.). A shift requires a change in one of the conditions of demand — the things held constant when the curve is drawn. Income is one of them. For a normal good, higher income means more is demanded at every price, so the whole curve moves to the right.

   Why the other options are wrong

   • A — This is the most common error in the topic. A change in the good's own price moves you along the existing curve; it never shifts it.
   • B — Streaming is a substitute for a cinema visit. If it becomes cheaper, some consumers switch to it, so demand for cinema tickets falls at every price and the curve shifts left.
   • D — Again a change in the good's own price, so a movement along the curve — and upwards rather than to the right.

3. 3. Tea and coffee are substitutes. All other things being equal, a sharp rise in the price of coffee will

   Applied reasoning

   Select one answer

   A Cause a movement along the demand curve for tea.

   B Shift the demand curve for tea to the left.

   C Shift the demand curve for tea to the right.

   D Shift the supply curve of tea to the right.
   Show model answer

   Answer: C (Shift the demand curve for tea to the right.). Coffee has become dearer, so some drinkers switch to tea. More tea is now wanted at every price of tea, which is an increase in demand and therefore a rightward shift of the tea demand curve. The price of a substitute is one of the conditions of demand, so a change in it moves the curve rather than moving you along it.

   Why the other options are wrong

   • A — A movement along the tea demand curve would require the price of tea to change. It is the price of coffee that has moved.
   • B — A leftward shift would follow if coffee became cheaper, drawing drinkers away from tea. The change here runs the other way.
   • D — Nothing has happened to the cost or ease of producing tea. Consumers switching between drinks is a demand-side change.

4. 4. The price of a normal good falls at the same time as consumer incomes rise. Sketching the market, the effect on the quantity demanded is best described as

   Applied reasoning Sketch to solve

   Select one answer

   A A movement along the original demand curve only.

   B A rightward shift of the demand curve and a movement along the new curve.

   C A rightward shift of the demand curve only, with no movement along it.

   D A rightward shift of the supply curve and a movement along the demand curve.
   Show model answer

   Answer: B (A rightward shift of the demand curve and a movement along the new curve.). Two separate things have changed, so sketch them one at a time.
   First, incomes rise. Income is a condition of demand and the good is normal, so draw a second demand curve to the right of the first.
   Second, the price falls. Price is on the axis, so this is read off as a movement along — and along the new curve, since that is the one now describing the market.
   Both effects push quantity demanded up, so it rises by more than either change would have produced alone.

   Why the other options are wrong

   • A — This captures only the price change. Ignoring the income rise means ignoring a genuine shift in the conditions of demand.
   • C — This captures only the income change. The price has fallen too, and a lower price means moving to a different point on whichever curve applies.
   • D — Nothing has happened to producers' costs or capacity, so the supply curve does not move. It is a rise in incomes, not a fall in production costs, that has driven the price down here.

5. 5. Table 1 shows the quantity of a good demanded at three prices, before and after a rise in consumer incomes.
   Using Table 1, the change between the two columns is best described as

   Data interpretation

   Table 1: Quantity demanded before and after a rise in incomes (units per week)

   Price	Quantity demanded before	Quantity demanded after
   £10	100	130
   £8	140	170
   £6	180	210

   Select one answer

   A A movement along the demand curve caused by a fall in price.

   B A rightward shift of the demand curve of 30 units at every price.

   C A rise in quantity demanded of 40 units caused by a fall in price.

   D An increase in demand that becomes larger as the price falls.
   Show model answer

   Answer: B (A rightward shift of the demand curve of 30 units at every price.). Compare the two quantity columns at the same price, which is what isolates a shift from a movement.
   At £10: 130 − 100 = +30. At £8: 170 − 140 = +30. At £6: 210 − 180 = +30.
   More is demanded at every price, by the same amount, so the whole curve has moved 30 units to the right. That is an increase in demand caused by the income rise, exactly as the table's heading suggests.

   Why the other options are wrong

   • A — A movement along the curve would be found by reading down a single column as the price changes. The table's two columns compare the same three prices, so what they show is a shift.
   • C — The 40 units is real but it belongs to the wrong comparison: it is the increase in quantity demanded from £10 to £8 within one column, which is a movement along the curve, not the shift between columns.
   • D — This is the trap for anyone who checks only one row. The shift is a constant 30 units at all three prices — it does not grow as the price falls.

6. 6. Real incomes in an economy fall. All other things being equal, the demand curve for an inferior good will

   Applied reasoning

   Select one answer

   A Become steeper, because consumers are less responsive to price.

   B Remain unchanged, because inferior goods are unaffected by income.

   C Shift to the left, because demand for all goods falls when income falls.

   D Shift to the right, because consumers switch towards inferior goods.
   Show model answer

   Answer: D (Shift to the right, because consumers switch towards inferior goods.). An inferior good is one whose demand moves in the opposite direction to income. When real incomes fall, households trade down — own-label groceries instead of branded, the bus instead of the car — so more of the inferior good is demanded at every price and its curve shifts right. This is why discount retailers tend to do well in a downturn.

   Why the other options are wrong

   • A — A change in income shifts the curve; it does not by itself change how responsive quantity demanded is to price. Steepness is about elasticity, which is a different question.
   • B — Inferior goods are highly sensitive to income — that responsiveness is precisely what defines them. What is distinctive is the direction, not the absence of an effect.
   • C — This is true of normal goods and is the answer most students give. Inferior goods are the exception, and the exception is the whole point of the category.

7. 7. Buyers in a market widely expect the price of a good to rise sharply next month. All other things being equal, the most likely effect on the market this month is

   Applied reasoning

   Select one answer

   A A leftward shift of the demand curve, as buyers wait for the price to settle.

   B A movement along the demand curve, as the current price has not yet changed.

   C A rightward shift of the demand curve, as buyers bring purchases forward.

   D No change, because expectations are not a condition of demand.
   Show model answer

   Answer: C (A rightward shift of the demand curve, as buyers bring purchases forward.). Expectations of future prices are one of the conditions of demand. If buyers believe a good will be dearer next month, the sensible response is to buy now, so more is demanded at today's price and the curve shifts right. The effect is self-fulfilling in the short run: the extra demand pushes today's price up before the expected rise has even happened, which is why announcements of future tax rises on fuel or alcohol are followed by a rush to buy.

   Why the other options are wrong

   • A — Waiting is the rational response to an expected price fall, not an expected rise. Delaying a purchase you know will get more expensive makes you worse off.
   • B — A movement along the curve requires the current price to change. Here it is buyers' beliefs that have changed, which is a shift in one of the conditions of demand.
   • D — Expectations are firmly among the conditions of demand. If they were not, markets in shares, houses and commodities would behave very differently from the way they do.