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The diagram below shows two demand curves for smartphones - Leaving Cert Economics - Question b - 2018
Question b
The diagram below shows two demand curves for smartphones. Price Quantity (i) Explain the shape of a demand curve for smartphones. (ii) State whether the shift in... show full transcript
Worked Solution & Example Answer:The diagram below shows two demand curves for smartphones - Leaving Cert Economics - Question b - 2018
Step 1
Explain the shape of a demand curve for smartphones.
Answer
The shape of a demand curve for smartphones is typically downward sloping from left to right. This indicates that as the price of smartphones decreases, the quantity demanded by consumers increases. This inverse relationship is foundational to the law of demand, reflecting consumer behavior where lower prices generally attract more buyers.
Step 2
State whether the shift in demand from D1 to D2 above represents an increase or a decrease in the demand for smartphones.
Answer
The shift in demand from D1 to D2 represents an increase in the demand for smartphones. This is indicated by the rightward shift of the demand curve, which shows that at every price level, consumers are willing to purchase more smartphones than previously.
Step 3
State and explain two reasons why the demand for smartphones might shift as indicated in the above diagram.
Answer
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Increase in incomes: When consumers experience an increase in their disposable income, they are more likely to afford smartphones, leading to a greater quantity demanded at all price levels.
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Changing preferences: Enhanced advertising or the introduction of desirable features in new models can shift consumer preferences, encouraging consumers to opt for newer smartphones and increasing overall demand.