03/12/2018 Demand The amount that an individual or individuals are willing to buy at any given price. For demand to be meaningful, it has to be backed up by the ability to pay. This is called effective demand. For virtually all products demand increases as price falls and vice versa

What is the overall aim of the business? 03/12/2018 What is the overall aim of the business? The overall aim of the business is to make money by: Meeting demand through getting them to try your product and continue to use your product/service. This is called repeat purchase.

Demand for Mars Bars in a school: 03/12/2018 Demand for Mars Bars in a school: Price Quantity Demanded Revenue £0.20 400 £80 £0.25 350 £87.50 £0.30 300 £90 £0.35 250 £0.40 200 £0.45 150 £67.50 £0.50 100 £50

This is what it looks like on a graph 03/12/2018 This is what it looks like on a graph

What does the graph show? 03/12/2018 What does the graph show? The demand curve is downward sloping because as the price of Mars bars increase, less people are prepared to pay the higher prices, so demand decreases. This company should therefore think carefully what price to sell their chocolate bars.

Factors leading to a change in demand: 03/12/2018 Factors leading to a change in demand: changes in the prices of substitutes and complementary goods changes in consumer incomes fashions, tastes and preferences advertising and branding demographics external shocks seasonality 1.2.1 Demand/1.2.2 Supply

03/12/2018 What is Supply? Supply - The amount of goods that producers are willing to supply / sell at a given price SUPPLY AND PRICE In virtually all cases supply increases as price increases and vice versa. This is because producers are aiming to make profit. If the good is sold at a high price they will make more profit. If it is sold at a low price they will either make very little profit or even a loss 1.2.1 Demand/1.2.2 Supply

Supply and Mars bars Price Quantity Supplied £0.20 100 £0.25 150 £0.30 03/12/2018 Supply and Mars bars Price Quantity Supplied £0.20 100 £0.25 150 £0.30 200 £0.35 250 £0.40 300 £0.45 350 £0.50 400 1.2.1 Demand/1.2.2 Supply

This is what the Supply Graph looks like 03/12/2018 This is what the Supply Graph looks like 1.2.1 Demand/1.2.2 Supply

What does the graph show us? 03/12/2018 What does the graph show us? The Supply curve is upward sloping (a positive correlation). This means that businesses want to supply their products at the highest possible price. This is so that it earns them the most amount of profit. BUT! Thinking back to our Demand curve customers want to pay the lowest price, so there has to be…. 1.2.1 Demand/1.2.2 Supply

The Equilibrium 03/12/2018 Price equilibrium is found where supply and demand are equal. This is the point where both sellers and buyers are happy with the price and quantity. 1.2.1 Demand/1.2.2 Supply

Think Pair Notes changes in the costs of production Monday, 03 December 2018 Think Pair Notes On your own Talk to your neighbour Write notes, in your own words. Describe each factor using the notes and by talking to your neighbour. 1445-1450 – Think and discuss then share ideas with the class for each point changes in the costs of production introduction of new technology indirect taxes government subsidies external shocks Physical constraints Adding value

Lime shortage case study 03/12/2018 Lime shortage case study 1.2.1 Demand/1.2.2 Supply