The market: Practice Questions

Which factor is most likely to cause a contraction (a movement upwards along) of the demand curve for Product X, assuming Product X is a normal good and all other factors remain constant?

In the context of the factors contributing to dynamic markets, how should a business distinguish between 'risk' and 'uncertainty' when planning its strategy?

A company producing high-end consumer electronics has found that its price elasticity of demand (PED) is typically \(-2.5\). If the company wants to increase its total revenue, what pricing decision should it implement, and why?

Identify two distinct factors that would lead to an increase (an outward shift) in the supply curve for coffee beans.

A company producing luxury yachts calculates the Income Elasticity of Demand (YED) for its product to be \( +2.5 \). Interpret this figure and explain the likely effect on demand for the yachts if consumer incomes are forecast to rise by 5%.

Part a) Identify and briefly explain two characteristics of a mass market.

Part b) Explain two benefits a business operating in a mass market might gain from developing a strong brand.

The global market for smartphones is constantly evolving due to rapid technological innovation and changes in consumer preferences, particularly the rise of online retailing.

Part a) Explain how two features of a dynamic market, such as the smartphone market, might impact a major established producer like 'TechCorp'.

Part b) Evaluate how increasing competition in this market (e.g., more competitors entering the online retail space) affects TechCorp's pricing strategy and long-term profitability.