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1.2.1 Demand & 1.2.2 Supply Typeit
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is defined as the amount of products and services that producers are willing and able to provide at a given price.
If prices rise then more suppliers will want to supply more goods to the market. If prices fall the is true.
If there is too much supply in a market this is called a .
If there is too little supply in a market this called a .
Factors which affect supply but have nothing to do with the price of the goods are called determinants of supply. These include:
New - where new machinery or processes will speed up production, which will mean an increase supply
Indirect - such as VAT; when this increases this will push up the costs of producing goods and so supply may fall
Government - such as money paid to farmers to produce essential goods such as milk and eggs, which would otherwise be unprofitable to produce. These will reduce the costs to the business, and as a consequence supply will rise.
Demand is defined as the amount of a product or service that a customer is willing and able to buy at a given .
There is a correlation between demand and price; if prices decrease then demand will increase. This proves that customers love a bargain.
There are a range of non-price determinants of demand or factors which may influence the amount of goods demanded which have nothing to do with the price of the goods.
NON-PRICE DETERMINANTS OF DEMAND
Changes in the price of goods, e.g. when travelling, the price of a bus vs the cost of taking a train
Changes in the price of goods, e.g. the cost of printer ink, or coffee pods for a coffee machine
Fashions and changing consumer , e.g. consumers are not demanding flares and platforms as much as they did in the 60s and 70s
Advertising, e.g. a fizzy drinks company launches a UK-wide campaign on TV and at bus stops
, e.g. if there is a baby boom then there will be increased demand for goods such as nappies, cots and prams
, e.g. in summer consumers start to purchase garden furniture, flip-flops and beachwear, products that they would not demand in winter