OCR Economics Supply and Demand Revision Notes
Master OCR 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 the quantity of a good or service available in the market interacts with consumer desire for that good or service. The price of goods is determined by the relationship between supply and demand, influencing market equilibrium.
Key Concepts
- 1Demand refers to the quantity of a good or service that consumers are willing and able to purchase at various prices.
- 2Supply refers to the quantity of a good or service that producers are willing and able to sell at various prices.
- 3The law of demand states that, all else being equal, as the price of a good decreases, the quantity demanded increases, and vice versa.
- 4The law of supply states that, all else being equal, as the price of a good increases, the quantity supplied increases, and vice versa.
- 5Market equilibrium occurs when the quantity demanded equals the quantity supplied, resulting in a stable market price.
Simple Explanation
Supply and demand are like two sides of a scale. When people want to buy more of something (demand) and sellers are willing to provide it (supply), they meet at a price that balances both sides. If demand goes up but supply stays the same, prices tend to rise. Conversely, if supply increases without a change in demand, prices usually fall.
Memory Trick
“Think of 'S' for Supply and 'S' for Sellers, and 'D' for Demand and 'D' for Desire; both need to balance for the market to work.”
Flashcards
What does demand refer to?
Tap to reveal answer
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 income changes, consumer 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▾
Include discussion of how lower costs can increase supply and higher costs can decrease supply.
What is meant by 'elasticity of demand'? [2 marks]
2 marksView mark scheme hint▾
Define elasticity and explain its significance in understanding consumer behavior.
Practice Quiz
What happens to demand when prices decrease?
Need custom study material?
Paste your own notes into StudyMate AI and instantly generate summaries, flashcards and quizzes tailored to your content.