Transcript Explain what equilibrium is. (2)

Test
Define demand (2)

‘the quantity of a good or service that a
consumer is willing to and able to buy(1) at a
given price in any given time period.’ (1)
Explain why the demand curve is
downward sloping. (2)


As price increases demand will decrease(1)
As price decreases demand will increase
Define supply (2)

The quantity of a good or service that
producers are willing and able to supply (1) onto
a market at a given price in a given time period
(1)
Explain why the supply curve is
upward sloping. (2)


As price increases, the quantity firms are willing
to supply onto the market increases.
As price decreases, the quantity firms are willing
to supply onto the market decreases.
Explain what equilibrium is. (2)

Price where quantity demanded is equal to
quantity supplied
Illustrate market equilibrium with the
use of a diagram (6)
S 1
Price 1
1
Pe
D 1
Qe
1
Quantity
1
Illustrate excess demand and supply
with the use of a diagram. (6)
S
Excess supply
Price
Pe
Excess demand
Qe
Quantity
D
Explain one problem for a firm if they
experience excess demand. (2)

Not enough products to satisfy demand (1)
therefore customers may be disappointed and
buy from competitors (1)
Explain two problems of operating in a
market with excess supply. (4)


Stock left unsold which may go off wasting
money (2)
May have to pay for extra storage for the excess
stock(2)
Name 4 conditions of demand. (4)


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
Income
Advertising
Complimentary and substitute goods
Population
Government policy
Demand for new houses
Demand will increase
therefore shift to the
right as people earn
more money they will
buy more new houses
S
Price 1
2
Pe
1
D
1
Qe
Quantity
1
D1
Demand for tennis balls if price of tennis
rackets increase (6)
Tennis balls and tennis
rackets are
complimentary goods
(1) As the price of
tennis rackets
increase less are
bought therefore there
is decreased demand
for tennis balls. Hence
a shift to the left (1)
S
Price 1
Pe
2
Qe
1 D1
D
1
Quantity
1
Decrease in the birth rate on the demand for
baby products. (6)
S
Demand will decrease
leading to a shift to the
left(1) Fewer products
will be demanded at
any given price(1)
Price 1
2
Pe
Qe
1 D1
D
1
Quantity
1
Demand for oil if people believe the price of
oil is going to increase in December. (6)
Demand will
increase as people
want to buy oil now
rather than pay a
higher price in
December. (1)
Demand will shift to
the right (1)
2
S
Price 1
Pe
D1
D
1
Qe
Quantity
1
1
Demand for bananas if the price
increases. (6)
S
Price
1
1
Movement along the
curve (1) as price
increases fro Pe to
P1 the quantity
demanded falls from
Qe to Q1.
P1
Pe
2
D
Q1
1
Qe
1
Quantity
Name 4 conditions of supply (4)
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Costs of factors of production
Technological advances
Changes in productivity of F.O.P
Changes in taxes and subsidies
Natural factors
Supply of computers if wages increase (6)
1
S1
S
1
Price 1
Pe
D
Qe
Quantity
1
Supply will decrease
at any given price as
factors of production
have increased.
Supply curve shifts to
the left.
2
Supply of wheat after a poor yield. (6)
1
S1
S
1
Price 1
Pe
D
Qe
Quantity
1
Supply will decrease
as the amount firms
can supply has
dropped. Supply will
shift to the left.
2
Supply of iphones after significant technological advancements
make the product cheaper to make.
S 1
1
S1
Price 1
Pe
D
Qe
Quantity
1
Supply will increase
and shift to the right as
apple will be willing to
supply more as they
make more money on
each unit.
2
Bad weather conditions (6)
1
Equilibrium price
increases from Pe to
P1. Quantity
demanded decreases
S1
S
2
Price 1
1
p1
Pe
D
Qe
Quantity
1
A fall in the price of fertiliser and new research
stating strawberries prevent cancer. (7)
S
S1
1
Price 1
Pe
Demand and supply
shift to the right
indicating an increase
in both supply and
demand. This results
in the equilibrium
price staying relatively
the same.
2
D
Qe
Quantity
1
D1 1
An increase in farm workers wages and a decrease in
income tax paid by consumers (7)
S1
1
Equilibrium price has
increased as supply
has shifted to the left
and demand to the
right. Demand stays
relatively similar.
2
S
Price 1
1
Pe
D
Qe
Quantity
1
D1 1