SUPPLY AND DEMAND
GCSE Business Studies
Outcomes
By the end of the lesson you will:
1.
2.
3.
Define demand and supply(E/D)
Explain how changes in demand and supply
will affect price(C)
Analyse the impact of a change in demand
or supply on consumer behaviour(A/B)
Tea
Define the terms “supply” and “demand”
 Why has the price of tea risen?
 Identify two factors that affect the consumer
demand for tea in the UK
 Why is demand for tea rising during the
recession?

Price £
Supply and Demand Graph
Quantity
Price £
Supply and Demand Graph
Demand Curve
Quantity
Supply and Demand Graph
Price £
Supply Curve
Demand Curve
Quantity
Supply and Demand Graph
Price £
Supply Curve
Equilibrium point
Demand Curve
Quantity
What factors affect supply and
demand?
Factors
affecting supply
and demand
March 2012: Petrol Panic!
So what happened?
The government warned there might be a petrol
strike and to top up (turns out there wasn’t!)
 People thought they’d be a shortage in supply
 Demand then increased creating a shortage
 Petrol stations charged more as they new people
would pay
 Sales increased 81%
 The government made an extra £32 million in fuel
duty

Commodity Market

A commodity is another word for raw materials
such as coal, oil, copper, iron ore, wheat and soya

They are traded all around the world and the price
that they are brought and sold is determined by
demand and supply
Causes of Shortages and Surpluses in
Commodity Markets
Many things can affect the supply of a given
commodity including:
 Failure of a crop – (wheat prices soared when fires
in Russia destroyed a lot of the harvest)
 Natural disasters – (Japanese Tsunami affected the
supply of nuclear power for energy)
 Fear of War – (oil prices increased because people
were worried about the war in Libya)
 Weather – some years farmers get the right
weather to produce lots of crops

So, in summary…

An increase in supply or decrease in demand
will reduce price

A decrease in supply or increased in demand
will increase price.
3 Mark question

How is the government’s ban on advertising
unhealthy food during children’s TV
programmes likely to affect the market for
Cadbury’s Dairy Milk?
 Point
 BLT
 Link to the business!
Outcomes
By the end of the lesson you will:
1.
2.
3.
Define demand and supply(E/D)
Explain how changes in demand and supply
will affect price(C)
Analyse the impact of a change in demand
or supply on consumer behaviour(A/B)
Create a supply and demand
poster containing:
Explain what supply and demand is
 Describe factors (with examples/pictures) of what
can effect supply and demand of products
 Give real recent examples of products that have
been in high demand or low supply. What happened
to the price?
 Draw and label a supply and demand diagram
 EXTENSION: On your graph, show and explain
what happens to the price with a change in supply or
demand

What’s been happening to the
demand and supply of loom bands
over the last 6 months?
Task:
Draw the demand and supply diagrams to illustrate the
following stages of demand and production of loom
bands:
1. Loom bands become very popular as they are worn
by celebrities and Royalty and are seen as a
fashionable item.
2. Firms shift resources to increase production of loom
bands and find more effective methods of
manufacturing the product.
3. Loom bands become less popular as customers
tastes change towards pre-prepared jewellery
manufactured from more durable materials.
S1
Price
Excess
Demand
P2
P1
D1
Q1 Q2
Stage 1
Loom bands
become very
popular as they
are worn by
celebrities and
Royalty and are
seen as a
fashionable item.
D2
Quantity
S1
Price
S2
P2
P3
D2
Q2 Q3
Stage 2
Firms shift
resources to
increase
production of
loom bands and
find more
effective
methods of
manufacturing
the product.
Quantity
Price
S2
P3
P4
D3
Q4 Q3
D2
Stage 3
Loom bands
become less
popular as
customers tastes
change towards
pre-prepared
jewellery
manufactured
from more
durable
materials.
Quantity