Chain of reasoning

Question 1

Demand-Increased price of subs

Answer 1

Leads to an increased demand which leads to an increased price and quantity demanded

Question 2

Demand-Less trendy

Answer 2

Leads to decreased demand which leads to a lower price and quantity demanded

Question 3

Supply-Increased cost of raw material

Answer 3

Leads to a higher cost of production which leads to a decreased supply which leads to a higher price but a lower QS

Question 4

Supply-Increased subsidies from the government

Answer 4

Leads to a higher supply which leads to a higher QS but a lower price

Question 5

Example 10 mark answer

Answer 5

A new trend for the use of braces causes an increase in demand. This is because more people are looking to buy braces as they are trendy. Demand is consumers desire to purchase goods and services and their willingness to pay a specific price. Originally, the market for braces is at a quantity demanded of Q and at a price of P and at an equilibrium of e. Because of the increase in demand, D shifts to D1, price from P to P1 and QD from Q to Q1. A high demand leads to a higher price as firms will try and maximise profits by increasing the price of a high demand profit. A high demand also leads to a higher quantity demanded as the firms increase their supply to meet an increased demand. In conclusion, a trend for braces would lead to an increased price and quantity demanded of braces