GCSE Economics Revision: Factors affecting demand and supply (With Mock Questions!)
Hey there, future economists! 👋 Let's dive into one of the most important topics for your GCSE Economics exam – factors affecting demand and supply. Don't worry, we'll break everything down into easy-to-digest chunks so you're totally ready to ace this topic! Let's get started!
Factors Affecting Demand and Supply
When you're looking at demand and supply, you're essentially focusing on how prices are determined in a market and what influences them. The law of demand states that when prices fall, the quantity demanded increases, and the law of supply tells us that as prices rise, the quantity supplied also increases. But what causes these changes in the first place? 🤔
That's where factors like income, population, prices of related goods, tastes and preferences, and expectations come into play for demand. On the supply side, cost of production, technology, and government regulations are just some of the key influences. You'll need to show that you can explain how these factors impact markets and ultimately affect equilibrium prices. Let’s break it down a bit more!
Key Learning Items
⭐ Demand Shifters: These include changes in income, preferences, prices of substitutes and complements, population size, and future expectations.
⭐ Supply Shifters: These focus on production costs, technology, number of sellers, government policies, and expectations about future prices.
⭐ Market Equilibrium: This happens when quantity demanded equals quantity supplied. You'll need to understand how shifts in demand and supply curves can affect prices and quantities.
What You Need to Demonstrate
At the GCSE level, it's important to:
💡 Explain how specific factors influence demand and supply. For example, if there's an increase in income, how will this affect the demand for luxury goods?
💡 Analyze the effects of these changes on market prices and quantities. Can you illustrate what happens when both demand and supply shift at the same time?
💡 Apply this knowledge to real-world examples. You might be asked to explain how technological improvements could lower production costs and increase supply for a product.
Key Things to Remember Before the Exam
Before you sit down for your exam, keep these tips in mind:
📝 Memorize the key factors: Ensure you can recall the main factors affecting both demand and supply.
📝 Practice drawing and interpreting supply and demand curves: You’ll need to show you understand how shifts in these curves work.
📝 Use real-world examples: You’ll likely be asked to apply concepts to real-life scenarios, so practice thinking about how these factors work in different markets (e.g., smartphones, cars, or housing).
📝 Mock questions: Test yourself regularly with past papers and multiple-choice questions (like the ones below!).
Mock Questions to Test Your Knowledge
Q1 - What happens to demand if the price of a substitute good increases?
a) Demand for the original good decreases
b) Demand for the substitute good decreases
c) Demand for the original good increases
d) Demand remains the same
Q2 - Which of the following is an example of a non-price factor affecting supply?
a) A change in the price of the product
b) The cost of production decreases
c) An increase in demand for the product
d) A rise in the income of consumers
Q3 - How does an increase in population affect demand?
a) Demand decreases
b) Demand increases
c) Demand remains unchanged
d) None of the above
Q4 - If the cost of raw materials rises, what is most likely to happen to supply?
a) Supply increases
b) Supply decreases
c) Supply stays the same
d) The effect on supply cannot be determined
Q5 - When demand increases and supply decreases simultaneously, what typically happens to price?
a) Price falls
b) Price rises
c) Price remains the same
d) None of the above
To check your answers and see more questions check out our GCSE Economics Multiple-Choice booklet, with 250 sample questions and answers for you to revise
Good luck with your revision! Keep going—you’ve got this! If you keep practicing and testing yourself, you'll be in great shape for your exam. 🎯 Keep pushing, and remember: every question is an opportunity to show what you know!