gcse economics - demand and supply - how changes in supply affect price
INCREASE IN SUPPLY (for reasons other than price)
An increase in supply (possibly due to a good harvest) has forced the price downwards. Buyers demand more goods to take advantage of this
What Happens |
Demand Curve |
Price |
Cheaper raw materials |
Shift right |
Down |
| Improved productivity / efficiency | Shift right |
Down |
| Technological improvements e.g. new machinery | Shift right |
Down |
| More expensive raw materials | Shift left |
Up |
| Lower productivity / efficiency | Shift left |
Up |
| Bad harvest or a shortage of the product | Shift left |
Up |
ACTION
A Try to draw the situation, which happens when supply shifts to the left.
Use the table to give 3 reasons why this may happen.
B Why will reduced costs of raw materials lead to an increase in supply?
These GCSE Economics revision notes have been kindly provided by Peter Davies of Mill Hill School, Ripley Keep Up-todate with your GCSE Economics - Subscribe Free to Economics in the News by Email
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