Law of Supply & demand

Question 1

What are some factors influencing demand?

Answer 1

Advertising, weather/seasons, income levels, substitute/complementary product prices, changes in fashion/taste, consumer trends.

Question 2

Define the law of supply.

Answer 2

Supply is the quantity of a good or service that producers or suppliers are willing to produce at a given price. The law of supply states that producers supply more at a higher price because selling a higher quantity at a higher price increases profit.

Question 3

What are factors influencing supply? (ACE)

Answer 3

Availability of resources.
Cost of raw materials.
Efficiency of production.

Question 4

Availability of resources.

Answer 4

Available labour and land.
New discoveries of raw materials.
Natural disasters.

Question 5

Cost of raw materials.

Answer 5

Wage increases.
Price increases of parts and fuel.
Interest rates increase/decrease.

Question 6

Efficiency of production

Answer 6

New production methods.
Staff training.
Reducing waste.
New machinery and technology.

Question 7

Define the law of demand.

Answer 7

Demand is the quantity of a particular good or service that consumers will purchase at a given price. The law of demand states that the higher the price of a product, the less of it consumers will buy, as less consumers are willing and able to pay that price.