Demand and Supply (1.2.1/1.2.2/1.2.3)

Question 1

What is the General Rule for Demand? (On Price and Quantity Demanded)

Answer 1

The higher the price the lower the quantity demanded.

Question 2

Factors leading to a change in Demand? (7 Factors)

Answer 2

-Price of Substitutes
-Change in Consumer Income
-Fashion, Tastes and Preferences
-Advertising and Branding
-Demographics
-External Shocks
-Seasonality

Question 3

What happens to Demand on a graph if it increases?

Answer 3

Demand shifts to the right

Question 4

What happens to Demand on a graph if it decreases?

Answer 4

Demand shifts to the left

Question 5

What will a change in demand do to Quantity?

Answer 5

Change in Demand will impact the Quantity Demanded at a given price

Question 6

What are Substitute Goods?

Answer 6

Alternative Products e.g. Coke+ Pepsi

Question 7

What are Complimentary Goods?

Answer 7

Complementary goods are bundled together e.g. Phone +Airpods

Question 8

What happens to a Demand Graph when Price of substitute increases?

Answer 8

Demand shifts to the right as if price of substitute increases demand for other product will increase.

Question 9

What happens to a Demand Graph when Price of Compliment increases?

Answer 9

Demand shifts to the left as less demand for a product if people aren’t buying it in a bundle.

Question 10

What is the General Rule for Supply?

Answer 10

The higher the price the higher the quantity supplied

Question 11

Factors leading to a change in Supply? (5 Factors)

Answer 11

-Changes in the costs of production
-Intro of new tech
-Indirect Taxes
-Government Subsidies
-External Shocks

Question 11

What does an Indirect Tax do to a Supply Graph?

Answer 11

VAT increases price of good and so supply shifts to the left and decreases.

Question 11

What is Cost of Production?

Answer 11

The expenses that the businesses incur to produce goods or services. They vary depending on type, size and business sector. If Labour costs increase so does the cost of production and output for a business decreases. So supply shifts to the left and decreases. Brexit, corona etc.. have increases the cost of production for businesses.

Question 11

What does a subsidie do to a Supply Graph?

Answer 11

Grant decreases price of good and so supply shifts to the right and increases.

Question 12

What is Digital Manufacturing?

Answer 12

Application of Digital Technologie to ,manufacturing. Aims to make process of production more efficient. It will bring down the cost of production as tech improves efficiency and so supply curve will shift to the right as increased output. This will mean firms can sell more.

Question 13

VAT and how it affects Supply

Answer 13

VAT is Value Added Tax ytaht you have to pay when you buy goods or services. The standard Rate is 20%. It affects supply by shiftig it to the left because the cost of production is increased and so price is increased. Firms will loose sales due to VAT.

Question 14

Subsidies and how they affect Supply

Answer 14

Subsidies are a financial contribution using public resources. Subsidies shift the supply curve to the right because it increases the output of a business as they have more money to spend on production and so have an increased supply overall.

Question 15

What is equilibrium on a Supply and Demand Graph?

Answer 15

its the point where the two lines cross over and its the point at which the price and quantity are perfect and there will be no excess.