GCSE Economics Supply and Demand Revision Notes
Master GCSE Economics Supply and Demand using simple revision notes, key facts and practice questions — all generated by AI for your exam.
Supply and demand are fundamental concepts in economics that describe how prices are determined in a market. Supply refers to how much of a good or service producers are willing to sell at various prices, while demand refers to how much consumers are willing to buy at those prices.
Key Concepts
- 1The law of demand states that as the price of a good decreases, the quantity demanded increases, and vice versa.
- 2The law of supply states that as the price of a good increases, the quantity supplied increases, and vice versa.
- 3Equilibrium is the point where supply equals demand, determining the market price.
- 4Shifts in demand or supply curves can be caused by factors such as changes in consumer preferences, income levels, or production costs.
- 5Price elasticity of demand measures how responsive the quantity demanded is to a change in price.
Simple Explanation
Supply and demand explain how prices are set in a market. When prices go down, people usually want to buy more, which is called demand. When prices go up, producers want to sell more, which is called supply. The point where the amount people want to buy matches what producers want to sell is called equilibrium.
Memory Trick
“Think of 'S' for Supply and 'D' for Demand as a seesaw: when one side goes up (price increases), the other side goes down (quantity decreases).”
Flashcards
What happens to demand when prices decrease?
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Exam Questions
Describe and explain the factors that can cause a shift in the demand curve. [6 marks]
6 marksView mark scheme hint▾
Discuss factors such as consumer income, preferences, price of substitutes, and price of complements.
Explain how a change in production costs can affect supply. [4 marks]
4 marksView mark scheme hint▾
Mention how higher costs can decrease supply and lower costs can increase supply.
What is meant by equilibrium price? [2 marks]
2 marksView mark scheme hint▾
Define equilibrium price as the price at which quantity supplied equals quantity demanded.
Practice Quiz
What does the law of demand state?
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