Price - demand and supply
- Created by: jaaaz_v
- Created on: 19-05-15 12:52
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- Demand and Supply
- Demand rises as price falls
- Demand is the quantity of a product that customers are willing and able to buy
- The law of demand says that when price increases the demand will fall
- And vise versa
- A decrease in price means an increase in demand
- More people can afford lower priced products
- Fall in demand and decreases in prices can both badly affect the profits of a business
- Supply rises as price rises
- Supply is the quantity of a product that producers are willing and able to make for sale
- The law of supply says that as the price increases, the quantity supplied increases
- And vice versa
- When the price is low, v few producers will be able to make a profit
- At high prices, even inefficient producers can make a profit
- Equilibrium
- When consumers and producers agree on the price and quantity to be exchanged
- Producers will want to sell at high prices and make large profits
- Customers will want to buy at a low price
- If price is too low there will be a shortage of supply
- If the price is too high there will be a surplus of supply
- Demand rises as price falls
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