Question

1.4 Discuss a factor that could lead to an inward shift of the curve drawn. (4 marks)

Answer 1

There are mainly 2 curves which can be shifted inward.

Demand curve may be shifted inward or a supply curve may be shifted inward.

The factors are:-

A DEMAND CURVE MAY SHIFT INWARD IF:-

-fall in income level

-the demand for one good would shift inward if the price of its substitute has decreased

-if the trend or taste of the consumer changes

-if the price of the complementary goods of this good rose, then the demand of this good will fall and curve will shift inward.

A SUPPLY CURVE WILL SHIFT INWARD IF:

- if the cost of production rises

-when firms exit the market

-natural and social factors