1. 03/12/2018
Demand
The amount that an individual or individuals are willing to buy at any given price.
For demand to be meaningful, it has to be backed up by the ability to pay. This is called effective demand.
For virtually all products demand increases as price falls and vice versa

2. What is the overall aim of the business?
03/12/2018
What is the overall aim of the business?
The overall aim of the business is to make money by:
Meeting demand through getting them to try your product and continue to use your product/service.
This is called repeat purchase.

3. Demand for Mars Bars in a school:
03/12/2018
Demand for Mars Bars in a school:
Price
Quantity Demanded
Revenue
£0.20
400
£80
£0.25
350
£87.50
£0.30
300
£90
£0.35
250
£0.40
200
£0.45
150
£67.50
£0.50
100
£50

4. This is what it looks like on a graph
03/12/2018
This is what it looks like on a graph

5. What does the graph show?
03/12/2018
What does the graph show?
The demand curve is downward sloping because as the price of Mars bars increase, less people are prepared to pay the higher prices, so demand decreases.
This company should therefore think carefully what price to sell their chocolate bars.

6. Factors leading to a change in demand:
03/12/2018
Factors leading to a change in demand:
changes in the prices of substitutes and complementary goods
changes in consumer incomes
fashions, tastes and preferences
advertising and branding
demographics
external shocks
seasonality
1.2.1 Demand/1.2.2 Supply

7. 03/12/2018
What is Supply?
Supply - The amount of goods that producers are willing to supply / sell at a given price
SUPPLY AND PRICE
In virtually all cases supply increases as price increases and vice versa.
This is because producers are aiming to make profit.
If the good is sold at a high price they will make more profit.
If it is sold at a low price they will either make very little profit or even a loss
1.2.1 Demand/1.2.2 Supply

8. Supply and Mars bars Price Quantity Supplied £0.20 100 £0.25 150 £0.30
03/12/2018
Supply and Mars bars
Price
Quantity Supplied
£0.20
100
£0.25
150
£0.30
200
£0.35
250
£0.40
300
£0.45
350
£0.50
400
1.2.1 Demand/1.2.2 Supply

9. This is what the Supply Graph looks like
03/12/2018
This is what the Supply Graph looks like
1.2.1 Demand/1.2.2 Supply

10. What does the graph show us?
03/12/2018
What does the graph show us?
The Supply curve is upward sloping (a positive correlation). This means that businesses want to supply their products at the highest possible price. This is so that it earns them the most amount of profit.
BUT! Thinking back to our Demand curve customers want to pay the lowest price, so there has to be….
1.2.1 Demand/1.2.2 Supply

11. The Equilibrium
03/12/2018
Price equilibrium is found where supply and demand are equal. This is the point where both sellers and buyers are happy with the price and quantity.
1.2.1 Demand/1.2.2 Supply

12. Think Pair Notes changes in the costs of production
Monday, 03 December 2018
Think Pair Notes
On your own Talk to your neighbour Write notes,
in your own words.
Describe each factor using the notes and by talking to your neighbour.
– Think and discuss then share ideas with the class for each point
changes in the costs of production
introduction of new technology
indirect taxes
government subsidies
external shocks
Physical constraints
Adding value

13. Lime shortage case study
03/12/2018
Lime shortage case study
1.2.1 Demand/1.2.2 Supply