In a market economy of the UK, decisions about what to produce are made through the _______.
marketplace
The market consists of two groups: buyers and sellers.
What are the two groups that make up the market?
- Buyers
- Sellers
Buyers seek satisfaction mainly in the form of value for money, while sellers aim to earn a living and make a profit.
Define demand.
The amount of a product that consumers are willing and able to purchase at any given price
More of a product will be purchased at a cheaper price than at a higher price.
What does a demand schedule show?
The relationship between price and quantity demanded
Example: At a price of 2, quantity demanded is 100.
What does the demand curve illustrate?
The quantity of a good or service demanded at any given price
It slopes downwards from left to right.
List the factors influencing demand.
- Price of substitutes
- Price of complements
- Changes in consumer incomes
- Fashion, tastes and preferences
- Marketing, advertising and branding
- Changes in population size and structure
- Seasonality
- External shocks
Changes in these factors can alter the conditions of demand.
True or false: A shift to the right in the demand curve indicates that larger quantities are wanted than before at given prices.
TRUE
A shift to the left indicates a decrease in demand.
How can demand curves be useful to businesses?
- Calculate revenue for price changes
- Predict consumer reactions to price changes
- Predict impact on revenue from price changes
They help in analyzing and planning marketing activities.
What is the formula for calculating Total Revenue?
Total Revenue = Selling price X Quantity sold
This formula helps businesses understand their revenue based on price changes.
