This set practises four skills from demand relationships: movement versus shift, explaining demand factors, reading quantities and building market demand. Questions run from easy to harder. Attempt each on paper first, then open the answer.
Unless stated otherwise, use the fictional Seri lime tea stall with demand Qd = 160 − 20P, where P is the price in RM per cup and Qd is cups per day. At RM2 to RM6 that gives 120, 100, 80, 60 and 40 cups.
Question 1. The stall cuts the price from RM5 to RM4. Name the change and give the new quantity demanded.
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Only the good’s own price changed, so this is a movement down the same curve, an extension in quantity demanded. At RM4: 160 − 80 = 80 cups, up from 60.
Question 2. A heatwave adds 30 cups to demand at every price. Write the new demand equation and the quantity at RM4.
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New demand: Qd = 160 + 30 − 20P = 190 − 20P. At RM4: 190 − 80 = 110 cups. The curve has shifted right because a non-price factor (weather) changed.
Question 3. A new stall nearby cuts the price of its barley drink. Explain the effect on demand for lime tea.
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Barley drink is a substitute. A cheaper substitute makes some buyers switch away, so fewer cups are wanted at every price. Demand for lime tea decreases and the curve shifts left. This is not a movement, because the price of lime tea did not change.
Question 4. What quantity is demanded at RM3 and at RM6?
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RM3: 160 − 60 = 100 cups. RM6: 160 − 120 = 40 cups.
Question 5. Assuming a straight line, what quantity is demanded at RM3.50?
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Halfway between 100 (RM3) and 80 (RM4) is 90. Check: 160 − 20 × 3.5 = 160 − 70 = 90 cups.
Question 6. The price rises from RM4 to RM5. Calculate the percentage change in the price and in the quantity demanded.
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Price: (5 − 4) ÷ 4 = 0.25, so +25%. Quantity: 80 falls to 60, a change of −20 on a base of 80, so −20 ÷ 80 = −25%. The base is always the starting value.
Question 7. The stall also sells fried noodles, bought with the tea. The price of fried noodles falls. What happens to demand for lime tea, and why?
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Noodles and tea are complements. A cheaper meal makes a noodle-and-tea combination cheaper, so buyers want more tea at each price. Demand for lime tea increases and the curve shifts right.
Question 8. Market B has demand Qd = 120 − 20P. Compare it with the stall’s original curve at RM5 and say whether it is a shift or a change in steepness.
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At RM5 the original gives 60 and B gives 120 − 100 = 20, so B is 40 lower. At RM3 the original gives 100 and B gives 60, again 40 lower. The gap is constant, so B is a parallel shift left by 40 cups, not a change in steepness. Both curves must use the same scale to compare them.
Question 9. Two buyers in the fictional market have demand Mei: 10 − 2P and Nur: 6 − P. Find market demand at RM3 and at RM1, and state the market equation.
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RM3: Mei 10 − 6 = 4 and Nur 6 − 3 = 3, so market 7 cups. RM1: Mei 8 and Nur 5, so market 13 cups. Equation: (10 − 2P) + (6 − P) = 16 − 3P. Check at RM3: 16 − 9 = 7.
Question 10. A student writes: “The stall’s price fell from RM5 to RM3, so demand increased and the curve shifted right.” Find the error, correct it and give the new quantity.
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A change in the good’s own price moves you along the curve. The curve does not shift. Correct: quantity demanded extended from 60 to 100 cups (160 − 60 = 100), a movement down the same curve. Demand would increase only if a non-price factor changed.
If you got these wrong
| Error type | Questions | Go to |
|---|---|---|
| Called a price change a shift, or the reverse | 1, 2, 10 | Movement along demand versus shift |
| Direction or reason of a factor unclear | 3, 7 | Explain a demand factor |
| Wrong reading, interpolation or percentage | 4, 5, 6 | Read quantity at a stated price |
| Compared curves without checking the gap | 8 | Compare two demand curves |
| Added prices, or wrong market total | 9 | Individual and market demand |
Log each missed question in the mistake log, and replay the cases in the demand, supply and shift explorer. The percentage-base explorer helps with Question 6.
When the same slip returns after you have read the explanation, an individual teacher can trace it to the habit behind it. Our online one-to-one Economics tuition is organised around that kind of diagnosis.