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CIPS L4M5 Exam - Topic 14 Question 67 Discussion

Actual exam question for CIPS's L4M5 exam
Question #: 67
Topic #: 14
[All L4M5 Questions]

Which of the following are factors that might shift the demand curve for a consumer good to the right?

1. Prices of complementary goods decrease

2. Price of the consumer good decreases

3. Customers' expectation of higher prices in the future

4. Consumer tastes shift toward substitute products

Show Suggested Answer Hide Answer
Suggested Answer: C

A shift in demand occurs when an influencing factor other than price changes. Those factors are:

- The income of buyers

- The tastes and preferences of buyers

- The prices of other goods and services, especially substitutes and complements

- Expectations of buyer about the future

In this question:

- 'Prices

of complementary goods decrease' will lead to quantity demanded for that complements rising, then demand for consumer good will increase accordingly.

- 'Price of the consumer good decreases' will increase the quantity demanded for that good, but it will not shift the demand curve

- 'Customers' expectation of higher prices in the future': in this scenario, customers tend to buy more to store in present, which leads to demand curve shifting to the right

- 'Consumer tastes shift toward substitute products': Demand for substitutes will rise, so demand for that consumer good will decrease and the demand curve shifts to the left.

LO 2, AC 2.2


by Dorothea at Aug 22, 2024, 05:12 PM

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Rosendo
3 months ago
Complementary goods decreasing in price is a classic demand booster!
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Chanel
3 months ago
Totally agree with 1 and 3! Makes perfect sense.
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Virgie
3 months ago
Wait, how does a decrease in the price of the good itself shift demand right? Seems off.
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Tomas
4 months ago
I think 4 is a factor too, but not in the way they say.
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Julianna
4 months ago
Definitely 1 and 3! Lower prices of complements and future price expectations boost demand.
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Alaine
4 months ago
I feel like option 1 and 2 could both lead to an increase in demand, especially if complementary goods are cheaper. I might lean towards option D.
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Clemencia
4 months ago
I practiced a similar question where we discussed how consumer tastes affect demand. If tastes shift towards substitutes, that might actually decrease demand, so I think option 4 is wrong.
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Blossom
4 months ago
I'm not entirely sure, but I think if consumers expect prices to rise in the future, that could shift demand to the right, which makes option 3 a contender.
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Nicholle
5 months ago
I remember that a decrease in the price of complementary goods usually increases demand for the main product, so option 1 seems right.
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Mi
5 months ago
I'm pretty confident on this one. Decreasing the price of the good itself would shift demand to the right, as would a shift in consumer tastes toward substitute products.
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Nicolette
5 months ago
Okay, let me think this through. I know that a decrease in complementary good prices and an increase in expected future prices would both shift demand to the right. Now I just need to figure out the other factors.
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Belen
5 months ago
Hmm, I'm a bit unsure about this one. I know the basics of demand curves, but I want to double-check my understanding before answering.
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Amie
5 months ago
This question seems straightforward, I think I've got a good handle on the factors that shift demand curves.
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Frederica
5 months ago
The Yellow Book is the GAO's own auditing standards, so I'm guessing the answer has to do with another set of standards they might use in addition to that. Let me review the options.
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Ranee
5 months ago
I'm a bit confused on this one. I'll need to review the Aviatrix documentation to see where they typically recommend storing backups.
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Terry
1 year ago
Yeah, Karma's strategy might work for multiple-choice trivia, but not for economics exams. Gotta think this through logically.
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Selma
1 year ago
Oh, I see. So it's not just about memorizing, but understanding the logic behind it.
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Blair
1 year ago
You're right, that would shift the demand curve to the right as well. So it should be D) 1 and 2 only.
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Kathrine
1 year ago
But what about when the price of the consumer good decreases? Wouldn't that also shift the demand curve to the right?
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Mable
1 year ago
A) 3 and 4 only
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Karma
1 year ago
Haha, I was just gonna choose the one with the most options, but I guess that's not the way to go here. Good thing I have you guys to bounce this off of!
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Alex
1 year ago
Yeah, that makes sense. So it's not always about choosing the most options, you have to think about how each factor affects demand.
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Chau
1 year ago
I think it's A too, because if customers expect higher prices in the future and their tastes shift towards substitute products, then demand would increase.
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Evangelina
1 year ago
A) 3 and 4 only
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Catrice
1 year ago
You're right, I didn't consider that. So the answer could be D) 1 and 2 only.
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Ryan
1 year ago
But if the price of the consumer good decreases, wouldn't that also shift the demand curve to the right?
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Catrice
1 year ago
I disagree, I believe the answer is B) 4 and 2 only.
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Alecia
1 year ago
Hmm, I was leaning towards option B, but I think Veta and Kent have a point. The demand curve would shift right with those factors.
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Kent
1 year ago
I agree with Veta. Factors that increase demand, like complementary good prices and future price expectations, are the right answer here.
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Viola
1 year ago
I agree, factors like complementary good prices and future price expectations can definitely shift the demand curve to the right.
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Viola
1 year ago
I think the correct answer is C) 1 and 3 only.
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Ryan
1 year ago
I think the answer is A) 3 and 4 only.
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Veta
2 years ago
Option C seems like the correct answer. Prices of complementary goods and customers' expectations of higher future prices would both shift the demand curve to the right.
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Karma
1 year ago
It makes sense, those are key factors that can impact demand for a product.
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Selma
1 year ago
I agree, those factors would definitely increase demand for the consumer good.
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Rose
1 year ago
I think option C is correct. Prices of complementary goods and customers' expectations of higher future prices would both shift the demand curve to the right.
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