Summary
Summary Demand and Supply
- Institution
- PEARSON (PEARSON)
Describes demand and demand curves, factors causing a change in demand, supply, factors causing a shift in supply, market equilibrium and price determination.
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Theme 1 Topic 12Demand and Supply
Demand
The number of customers willing and able to purchase a product at the given
demand
Demand Curve – shows the relationship between the quantity demanded and the price
of a product.
Movements along the demand curve – when the price is increased, quantity demanded
decreases and vice versa.
Factors Causing a Change in Demand
Population and demographics
Laws
Advertising and branding
Substitute goods
Tastes and fashions
Incomes
Complementary goods
Quality
Supply
Refers to the quantity of a product that producers are willing and able to provide at different market
prices over a period of time.
Shift in Supply
A change in anything else affecting supply, other than price, causes a new curve.
These factors are to do with costs.
An increase in costs reduces the suppliers potential profits and so are willing to
supply less at each given price as they have less incentive to do so.
Some suppliers may switch their factors of production to making other goods in more profitable industries, for
example.
Factors Affecting Supply
Cheaper raw materials
New technology
Decrease in wage costs
Indirect taxes e.g. VAT
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