Economics Demand & Supply
Revision Edexcel with correct answers
100% 2026
Define Demand - Correct Answers The amount of goods and services consumers are willing and
able to buy at a given price point in a given time period
What does the demand curve represent? - Correct Answers Marginal Utility
What is marginal utility? - Correct Answers The satisfaction gained from last unit consumed
Define Supply - Correct Answers The quantity of goods that sellers are prepared to sell at ant
given price over a period of time
When does a contraction in the supply curve ONLY happen? - Correct Answers When there is a
fall in price (so a fall in quantity supplied)
when does an expansion/extension ONLY occur? - Correct Answers When there is a rise in price
(so a rise in quantity supplied)
Name the 3 conditions of supply - Correct Answers Cost of Production, Technology, Prices of
other goods
With price determination, when does equilibrium occur? - Correct Answers When
supply=demand. (when the market clears and there is no tendency to change)
When does excess demand occur? - Correct Answers When the price is below the equilibrium
price (quantity demanded > quantity supplied)
, When does excess supply occur? - Correct Answers When the price is above the equilibrium
price (quantity supplied > quantity demanded)
What is the rationing function? - Correct Answers The price for a good/service rises (indicating
supply is getting more scarce) and only those willing and able to pay the higher price will
purchase it
What is the incentive function? - Correct Answers As the price starts to rise, firms have an
incentive to produce more as there is more potential profit in the market
What is the signalling function? - Correct Answers Changing prices act as a signal of market
condition to both firms and consumers
A contraction in the demand curve is...? - Correct Answers An increase in price
An extension in the demand curve is...? - Correct Answers A decrease in price
an expansion outwards is...? - Correct Answers An increase in demand
What is consumer surplus? - Correct Answers the difference between what consumers are
willing and able to pay for a good/service vs what they actually pay
What is derived demand? - Correct Answers Demand that comes from something else (i.e.
demand for machinery is derived form demand for the consumer goods that the machinery
makes)
What is composite demand? - Correct Answers when goods/services have more than one use so
an increase in demand for one product leads to a fall in supply for the other
Revision Edexcel with correct answers
100% 2026
Define Demand - Correct Answers The amount of goods and services consumers are willing and
able to buy at a given price point in a given time period
What does the demand curve represent? - Correct Answers Marginal Utility
What is marginal utility? - Correct Answers The satisfaction gained from last unit consumed
Define Supply - Correct Answers The quantity of goods that sellers are prepared to sell at ant
given price over a period of time
When does a contraction in the supply curve ONLY happen? - Correct Answers When there is a
fall in price (so a fall in quantity supplied)
when does an expansion/extension ONLY occur? - Correct Answers When there is a rise in price
(so a rise in quantity supplied)
Name the 3 conditions of supply - Correct Answers Cost of Production, Technology, Prices of
other goods
With price determination, when does equilibrium occur? - Correct Answers When
supply=demand. (when the market clears and there is no tendency to change)
When does excess demand occur? - Correct Answers When the price is below the equilibrium
price (quantity demanded > quantity supplied)
, When does excess supply occur? - Correct Answers When the price is above the equilibrium
price (quantity supplied > quantity demanded)
What is the rationing function? - Correct Answers The price for a good/service rises (indicating
supply is getting more scarce) and only those willing and able to pay the higher price will
purchase it
What is the incentive function? - Correct Answers As the price starts to rise, firms have an
incentive to produce more as there is more potential profit in the market
What is the signalling function? - Correct Answers Changing prices act as a signal of market
condition to both firms and consumers
A contraction in the demand curve is...? - Correct Answers An increase in price
An extension in the demand curve is...? - Correct Answers A decrease in price
an expansion outwards is...? - Correct Answers An increase in demand
What is consumer surplus? - Correct Answers the difference between what consumers are
willing and able to pay for a good/service vs what they actually pay
What is derived demand? - Correct Answers Demand that comes from something else (i.e.
demand for machinery is derived form demand for the consumer goods that the machinery
makes)
What is composite demand? - Correct Answers when goods/services have more than one use so
an increase in demand for one product leads to a fall in supply for the other
