Business Studies (AS)·Elements of the marketing mix: product & price · NSSCAS 3.5
Demand, supply and equilibrium price
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Where does the price on a market stall actually come from? In this lesson you will draw a demand curve and a supply curve, find the equilibrium price and quantity where they cross, and prove what happens when demand or supply shifts. You will also learn to calculate price elasticity of supply and say whether supply is elastic or inelastic. The examiner loves this topic because it can be tested three ways at once — a definition, a diagram and a calculation.
What you'll learn in this lesson
By the end you should be able to (NSSCAS Business Studies (AS) 3.5):
- define demand and supply
- explain the principle of equilibrium price and quantity
- construct and analyse simple market situations with changes in supply and demand
- describe the causes of changes in demand and supply conditions and analyse such changes to show the effect on prices
- explain and calculate price elasticity of supply
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