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 goods and services available (supply) interacts with the desire of consumers to purchase them (demand). The relationship between these two forces determines market prices and the allocation of resources.
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.
- 4The law of supply states that, all else being equal, as the price of a good increases, the quantity supplied increases.
- 5Market equilibrium occurs when the quantity demanded equals the quantity supplied, resulting in a stable market price.
Simple Explanation
Supply and demand are like a dance between buyers and sellers. When people want to buy more of something, the demand goes up, which can make prices rise. On the other hand, if sellers are willing to offer more of a product at higher prices, that's supply. The point where the amount people want to buy equals the amount sellers want to sell is called market equilibrium.
Memory Trick
“Think of 'D' for Demand and 'D' for Decrease: When prices decrease, demand increases. For supply, remember 'S' for Supply and 'S' for Sell: When prices increase, supply increases.”
Flashcards
What is demand?
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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▾
Consider factors like consumer income, tastes and preferences, price of substitutes and complements, and population changes.
Explain how a change in the price of a substitute good can affect the demand for a product. [4 marks]
4 marksView mark scheme hint▾
Discuss the relationship between substitute goods and how price changes influence consumer choices.
What is meant by 'elasticity of demand'? [2 marks]
2 marksView mark scheme hint▾
Define elasticity and its significance in understanding consumer responsiveness to price changes.
Practice Quiz
What happens to demand when the price of a good decreases?
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