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) ‘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 increases demand will decrease(1) As price decreases demand will increase 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) 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 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. 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 Price where quantity demanded is equal to quantity supplied

Illustrate market equilibrium with the use of a diagram (6) Quantity Price D S Pe Qe

Illustrate excess demand and supply with the use of a diagram. (6) Quantity Price D S Pe Qe Excess supply Excess demand

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) 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) Stock left unsold which may go off wasting money (2) May have to pay for extra storage for the excess stock(2) May have to pay for extra storage for the excess stock(2)

Name 4 conditions of demand. (4) Income Income Advertising Advertising Complimentary and substitute goods Complimentary and substitute goods Population Population Government policy Government policy

Demand for new houses Quantity Price D S Pe Qe D1 Demand will increase therefore shift to the right as people earn more money they will buy more new houses 2

Demand for tennis balls if price of tennis rackets increase (6) Quantity Price D S Pe Qe D1 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) 2

Decrease in the birth rate on the demand for baby products. (6) Quantity Price D S Pe Qe D1 Demand will decrease leading to a shift to the left(1) Fewer products will be demanded at any given price(1) 2

Demand for oil if people believe the price of oil is going to increase in December. (6) Quantity Price D S Pe Qe D1 2 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)

Demand for bananas if the price increases. (6) Quantity Price D S Pe Qe P1 Q1 1 1 Movement along the curve (1) as price increases fro Pe to P1 the quantity demanded falls from Qe to Q1.

Name 4 conditions of supply (4) Costs of factors of production Costs of factors of production Technological advances Technological advances Changes in productivity of F.O.P Changes in productivity of F.O.P Changes in taxes and subsidies Changes in taxes and subsidies Natural factors Natural factors

Supply of computers if wages increase (6) Quantity Price D S Pe Qe Supply will decrease at any given price as factors of production have increased. Supply curve shifts to the left. 2 S1

Supply of wheat after a poor yield. (6) Quantity Price D S Pe Qe Supply will decrease as the amount firms can supply has dropped. Supply will shift to the left. 2 S1

Supply of iphones after significant technological advancements make the product cheaper to make. Quantity Price D S Pe Qe 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 S1

Bad weather conditions (6) Quantity Price D S Pe Qe S1 Equilibrium price increases from Pe to P1. Quantity demanded decreases p1 1

A fall in the price of fertiliser and new research stating strawberries prevent cancer. (7) Quantity Price D S Pe Qe S1 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. D1 1

An increase in farm workers wages and a decrease in income tax paid by consumers (7) Quantity Price D S Pe Qe S1 Equilibrium price has increased as supply has shifted to the left and demand to the right. Demand stays relatively similar. D1 1 1