1. How are prices influenced?
Starter
and-demand-of-the-world-banana- market/502.html
Think pair share:
How are prices influenced?
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2. GCSE Business Studies
Demand and Supply
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3. Learning Objectives by the end of this lesson students….
Will be able to evaluate how changes in supply can impact on a business
Evaluation ~ GCSE Grade A*
Will be able to propose reasons for changes in supply/demand
Synthesis~ GCSE Grade A
Will be able to analyse the impact of a shortage or surplus in supply
Analysis ~ GCSE Grade B
Will be able to demonstrate understanding by using examples/cases
Application ~ GCSE Grade C
Will be able to explain the difference between supply and demand
Comprehension ~ GCSE Grade D
Will be able to recall key terms supply and demand
Knowledge ~ GCSE Grade E 10
Draw in the margin of your book and put your number 1

4. Theory
Notes
Demand and Supply
Demand – the amount consumers are willing and able to buy at any given price
Supply – the amount sellers are willing to offer for sale at any given price
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5. England Replica kit When are prices highest in England?
Why do you think this is?
What will kit suppliers do during this period?
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6. Theory
Notes
Supply
Quantity S
The higher the price, the more enthusiastic the business will be to supply.
So as price rises, the quantity supplied increases
Price
EXAM TIP:
A supply line ALWAYS goes in an UPWARDS direction.
To help you remember the word UP is in sUPply.

7. Demand As prices fall, quantity demanded increases
Theory
Notes
Demand
Quantity
As prices fall, quantity demanded increases
E.g. If prices are reduced from £2.50 to £1 demand will increase
Price D
EXAM TIP:
A demand line ALWAYS goes in a DOWNWARDS direction. To help you remember Demand and Down both start will the letter D.

8. What happens when there is a shortage in supply?
Theory
Notes
What happens when there is a shortage in supply?
Shortage
When there is a demand for a good or service is greater than the supply.
When a shortage exists, prices will tend to rise.
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9. What happens when there is a surplus in supply?
Theory
Notes
What happens when there is a surplus in supply?
Surplus
When demand for a good or service is less than the available supply
When a surplus exists, prices will tend to fall
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10. What happens when there is a shortage or surplus in supply?
ca/ stm
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11. So how is the price decided?
Theory
Notes
So how is the price decided?
The equilibrium point is the optimal price.
Equilibrium point – where the supply and demand lines cross.
Quantity
At equilibrium point:
Businesses are willing to supply for £4
Consumers are willing to buy for £4
Businesses can’t charge prices that consumers won’t pay
Businesses won’t supply goods at low prices S
Price D

12. Theory
Notes
Shortage or Surplus?
We can see below that the equilibrium price is £4 and the quantity is 15.
Quantity
If the price is greater than 4 the quantity demanded will fall but the quantity supplied will increase. This will cause a SURPLUS. S
Price D
If the price is less than 4 the quantity demanded will rise but the quantity supplied will decrease. This will cause a SHORTAGE.
Progress Arrow

13. What are all these products?
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14. What are all these products?
Theory
Notes
What are all these products?
These are raw materials e.g. coal, oil, copper, wheat
Also known as Commodities
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15. Where buyers and sellers meet to exchange commodities
Theory
Notes
Commodity Market
Where buyers and sellers meet to exchange commodities
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16. Differences between markets
Theory
Notes
Differences between markets
Price of Oil has changed very quickly – rising sharply then falling back
Price of most items in shops do not change like this
There is a difference between commodity markets and market for everyday goods/services which are called Goods Markets.
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17. Changing commodity prices
Theory
Notes
Changing commodity prices
Business have little control over the price they have to pay for raw materials
Prices are determined on international markets
These can affect small businesses e.g. cost of oil, petrol
Cash Flow forecasts are impacted
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18. Theory
Notes
The size of the effect
How much of total costs are made up of raw materials and energy costs?
How large is the change in price?
Can the business pass on the increase in costs? (absorption)
Progress Arrow
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19. Learning Objectives by the end of this lesson students….
Will be able to evaluate how changes in supply can impact on a business
Evaluation ~ GCSE Grade A*
Will be able to propose reasons for changes in supply/demand
Synthesis~ GCSE Grade A
Will be able to analyse the impact of a shortage or surplus in supply
Analysis ~ GCSE Grade B
Will be able to demonstrate understanding by using examples/cases
Application ~ GCSE Grade C
Will be able to explain the difference between supply and demand
Comprehension ~ GCSE Grade D
Will be able to recall key terms supply and demand
Knowledge ~ GCSE Grade E 10 1