Price - demand and supply

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  • 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

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