Professional Documents
Culture Documents
Tutor2u Economics
AS Economics
March 2001
Demand:
The quantity of a product consumers are willing and able to
buy at different prices in a specified time period
Q1 Q2 Q
Market Supply –
The quantity that producers are willing and able to OFFER for
sale at different prices during a specified period of time
quantity
S
P
Equilibrium established
when market demand =
P2 market supply
P1 At P2 there is excess supply
(S>D)
P3
At P3 there is excess
demand (D>S)
Q1 Q
Q1 Q2 Q
S1
P S2
In the example shown we see
an outward shift in the supply
curve
P1 Market price falls from P1 to
P2
P2
Equilibrium quantity rises from
Q1 to Q2
Does the consumer benefit?
D
Q1 Q2 Q
Q2 Q1 Q
P Change in consumer
S1
tastes and preferences
causes an outward shift
in demand
P2 Increase in demand puts
the pressure on available
P1 supply
Increase in equilibrium
market price and quantity
D D2 Total spending increases
Producers enjoy higher
Q1 Q2 Q total revenue / profits