Which of the following does NOT affect the quantity demanded of a product?

Question

a The price of the product.

b The price of related goods.

c Consumer income.

d The cost of producing the product

Answer 1

d The cost of producing the product

Answer 2

Items a, b, and d are all components of one thing. The cost of producing a product does add to its price or value. The price of related goods affects what costs a consumer incurs to use the product in question. Therefore, all these three items somehow reflect the price of the product. Consumer income definitely affects the demand also. Higher income results to higher demand and shifts the demand curve to the right.

If you ask a classical economist, he or she will probably tell you that the price of a product is the result of its supply and demand and not the other way around. However, in some economic systems such as monopolies or oligopolies with price fixation, the demand is affected by the price. The monopolist can set the price and the consumers will have to adjust their demand based on that. This also happens when there is price floors. For example, when there is a legal mandate that sets a minimum for price of a product (e.g. the product is labor), the demand for that product can be affected. However, many economists believe that price floors do not change the demand, they only result in surplus of a good. For instance, an employer wants to hire 10 people, but with a minimum wage law in place, she can only afford to hire 8. In this case, the system will witness a surplus of labor force because not all available laborers can be hired--their labor and service cannot be purchased.

To summarize things, in a perfect free market system only the consumer income out of the aforementioned elements affects the demand. But in many economic systems all four factors can shift the demand for a particular product. I hope this has been helpful.

Answer 3

Hello

The correct answer is d The cost of producing the product

because this affects the Quantity Supplied not the Quantity Demanded.

As a side note, The PRICE of the product also, does not affect the Quantity Demanded, it AFFECTS Demand.  A change in the price would lead to a shift of the demand curve, not to a movement along the curve, so Price affects demand not quantity demanded.  But in the context of your question, the correct answer as I mentioned in the beginning is d The cost of producing the product