Summary Demand and Supply

Theme 1 Topic 12
Demand and Supply
Demand
 The number of customers willing and able to purchase a product at the given
demand

Demand Curve – shows the relationship between the quantity demanded and the price
of a product.

Movements along the demand curve – when the price is increased, quantity demanded
decreases and vice versa.

Factors Causing a Change in Demand

 Population and demographics
 Laws
 Advertising and branding
 Substitute goods
 Tastes and fashions
 Incomes
 Complementary goods
 Quality



Supply
 Refers to the quantity of a product that producers are willing and able to provide at different market
prices over a period of time.



Shift in Supply

A change in anything else affecting supply, other than price, causes a new curve.
These factors are to do with costs.

An increase in costs reduces the suppliers potential profits and so are willing to
supply less at each given price as they have less incentive to do so.

Some suppliers may switch their factors of production to making other goods in more profitable industries, for
example.

Factors Affecting Supply

 Cheaper raw materials
 New technology
 Decrease in wage costs
 Indirect taxes e.g. VAT