Supply & Demand Edexcel Unit 1 Business Studies

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  • Supply & Demand
    • Supply is measured in terms of the quantity of a good or service that a producer is willing and able to make available on the market, at a given price, over a given time.
      • Factors leading to a change in Supply
        • A change in the production process.
          • Due to a rise in raw materials.
          • Rise in the Minimum Wage
          • Rise in overheads.
          • Rise in rent or mortgage.
          • The amount supplied will decrease as less profit will be made
        • Introduction of new technology
          • New technology used in production process
          • New technology normally more efficient  and will help lower costs.
            • New technology used in production process
      • The amount supplied will decrease as less profit will be made
    • Demand is the amount of a good that consumers are willing and able to pay at a given price.
      • Law of Demand
        • When price goes up, demand goes down.
      • Factors affecting demand.
        • Price of Substitutes
          • If the price of a good falls, the quantity demanded of the substitute rises.
          • If a good has a lot of close substitutes then the prices of these will affect demand significantly.
        • Changes in consumer incomes.
        • Changes in fashions, tastes and preferences.
        • Advertising and Branding
        • Demographics
      • Price of Complements
        • e.g if you buy cereal you will buy milk to.
        • Price of a good will be affected my its complement.
          • e.g if you buy cereal you will buy milk to.
    • PED, Price Elasticity of Demand
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