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Summary AS Level Notes Economics Unit 1 Demand/Supply/Elasticity
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AS Level Notes Economics Unit 1 Demand/Supply/Elasticity Revision Notes
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DemandTotal amount of goods and services that consumers are willing to buy at a
given price and given period of time
Price n
p
earontraction BCSIncrease in Quantity Demanded
pz I B tension BAs Decrease in Quantity Demanded
B t t ofD
Changes in price cause movement along demand carve
QaQ2 Q3 Quantity
equilibrium
P
shift in demand curve up or down
µg Factors causing a shift in demand
aftertaxation
curve
a Income of consumers 9indisposable incomeconsumer affors moreluxury
Advertisement persuad consumers to buy goods 90004
Complementary goods goods that gotogether ex car and oil
Substitute goods goods that are used instead 6104
Peps
of each other ex
Tastes Fashion consumers will buylatest fashion cloth
Population 9population 9demand
Supply
Amount of goods and services producers are willing to supply at a given price
and period of time
price Price is the most important factor that affects supply
80
Aprice Tsupply as business want to earn moreprofit
to
60 x
1
1 Change in price moves us along the supplycurve
so pension
no 1 Factors influencing supply
30 x
l Higher cost ofproduction I supply
I
20 qopyrd't't l b n sa
i l
N i
l
l ar's Shiftslefthpwards
o t s
l i s
a 2
i
3 4
i r
5 6
i r
7 8 Quantity J
Higher cost of labour
Higher tax 5
Higher subsidies 2
excesssupply
S n
52 Shiftright downwards
i g
Technology advancements cost to
excess 1demand Dn
Diminishing Marginal Utility
, J J
1meal a month prepared topay 50 explanation The utility satisfaction diminishes reduces
2meals a month prepared to
pay 35 as more and more goods are bought
3meals a months prepared to pay 20 so the price must decrease to
persuade consumers to buythe good
Marginal change ex between i 2,3 meals Thisexplains whydemand slopes down
Effect on demand curve
from more equal distribution of income
Higher income earners will sateless
Lower income earners will demand moregoods and services
Overall effect demand will shift to the right
Normal good good which demand increases when incomes rise ex restaurant taxi
Interiorgood good which demand decreases when incomes rise ex fastfood bus
consumer surplus value that consumer gains from buying a good or service
over and above the market price It is shown by area
season underthe demand curve and above the equilibrium price
y si
consumer surplus always 9 when prices I
gunrsptiser
o
100 Pi
t Dn
Qr y
person herehadto pay 150 however bought it for 100 so saved 50
Producer surplus Additional value the producer gets over and above theprice change
utility
P Total
gained Note When supply dueto costs
Price9 4 51
of production 9 prices 9
Producer
surplusq 100
demand d
go.draiesr.no XXXXiPjidkeeienue Eqnesyfo.ge qgdsucersurpwsw
l
g
Q
Prepared to supply at 10 but are sold 100 so recieve too extra
Producer surplus 1 Consumer surplus Social surplus
social surplusesnet gain to society from existence of these transactio
Altham
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