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O Levels Economics (2281)•2281/13/O/N/19
Question 6 from 2281/13/O/N/19

Explanation

Movement along supply curve from rising product price due to demand increase

Steps:

  • Identify that movement upwards along supply curve means higher price leads to higher quantity supplied, per law of supply.
  • Recognize this price rise stems from a rightward demand shift, not supply change.
  • Evaluate choices: only one causes demand increase without shifting supply.
  • Select D, as substitute price rise boosts demand for this product.

Why D is correct:

  • Per substitution effect, higher substitute price increases demand for this product, shifting demand curve right and raising equilibrium price, prompting upward movement along unchanged supply curve.

Why the others are wrong:

  • A: Fallen incomes shift demand left for normal good, lowering price and causing downward movement along supply.
  • B: New technology shifts supply right, increasing quantity at same price, not movement along curve.
  • C: Tax shifts supply left, raising price via supply change, not movement along curve.

Final answer: D

Topic: Supply

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