Key Words

Question 1

Supply

Answer 1

The amount sellers are willing to offer for sale at any given price

Question 2

The demand curve

Answer 2

This shows the relationship between price of a product/service and the quantity that is demanded.
- the demand curve is associated with the customer.

Question 3

Law of demand

Answer 3

The law of demand states that, all else being equal, as the price of a product increases, quantity demand falls; likewise, as the price of a product decreases, quantity demanded increases.

Question 4

What the demand curve shows

Answer 4

• the demand curve shows us that as price rises people demand more/less of the product.
• if a business were to have a special offer and reduce the price of dorm thing, more/less of the product would be sold.
• the demand curve helps businesses to see how consumers will react to changing prices.

Question 5

The supply curve

Answer 5

• this shows the relationship between the price of a product/service and how much of it will be supplied in the market.
• it is more relevant to the suppliers (not the customers) in this instance as they will need to know their limits to avoid surplus or shortage (deficit)
• the supply curve shows us that as price rises people supply more/less of the product.

Question 6

Movement

Answer 6

= price

Question 7

Shift

Answer 7

= any other factor

Question 8

Key points

Answer 8

• if the price is high suppliers will be willing to supply more as they will be making more profit.
• • however, the high price will mean demand will be lower as customers might not like the high price.
• if the price is low suppliers will be less willing to supply as they will be making little profit.
• • however, a low profit will mean demand will be higher as customers will like the lower price and a better deal for themselves.

Question 9

Profit

Answer 9

The amount of money that is left over after all costs are paid for.

Question 10

Shift in market demand

Answer 10

• the demand curve may shirt to the right (increase) for several reasons:
• • a rise in the price of a substitute or a fall in the price of a complement
• • an increase in consumers income or wealth
• • changing consumer tastes and preferences in favour of the product
• • a fall in interest rates (I.e bank borrowing rates or mortgage interest rates)
• • a general rise in consumer confidence and optimism.

Question 11

Demand

Answer 11

The amount consumers are willing and able to buy at any given price