Question Bank - General Knowledge

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Which one of the following does not influence quantity demanded for a good?

A.
Good's own price
B.
Price of a complementary good
C.
Price of a substitute good
D.
Prices of inputs into production of the good

Solution:

The correct answer is the Prices of inputs into production of the good.Demand of GoodsIt is an economic principle referring to a consumer's desire to purchase goods and services and willingness to pay a price for a specific good or service.A demand curve is a graphic representation of the relationship between product price and the quantity of the product demanded.Income is not the only factor that causes a shift in demand.The other things that change demand include tastes and preferences, the composition or size of the population, the prices of related goods, and even expectations.There is an inverse (negative) relationship between the price of a product and the amount of that product consumers are willing and able to buy.Consumers want to buy more of a product at a low price and less of a product at a high price. This inverse relationship between price and the amount consumers are willing and able to buy is often referred to as The Law of Demand. A shift in the demand curve is when a determinant of demand other than price changes.It occurs when demand for goods and services changes even though the price didn't.A shift in the demand curve is an unusual circumstance when the opposite occurs.The prices of complementary or substitute goods also shift the demand curve. When the price of a good that complements good decreases, then the quantity demanded of one increases and the demand for the other increases.The price remains the same but at least one of the other five determinants changes.Those determinants are: ?Income of the buyer.Consumer trends and tastes.Expectations of future price, supply, needs, etc.The price of related goods.The number of potential buyers.Therefore, the prices of inputs into production does not affect the quantity of a product demanded by the consumer. Hence, Option 4 is correct.

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