Demand and supply are one of the most essential concepts of A-level Economics. So, having a good grasp of this concept is important. Often, students hesitate to attempt the demand and supply questions as they feel that it’s complicated. However, the truth is that with proper conceptual understanding and the support of the mentors, anyone can ace this chapter of economics.
In this article, we will give a brief explanation of demand and supply. Then, we will discuss the problems students usually face with this concept, and also the key points to take note of when preparing for this chapter.
The Concept of Demand & Supply
Demand and supply are the two key concepts of A Level economics. Their primary purpose is to determine a good’s value or price through their interaction graph. Moreover, the change in the price and quantity of interest is determined by the supply and demand curves, respectively.
There are two factors that you need to study for your economics exam. Let us look at the brief description of both:
Demand and Price Elasticity of Supply
You must have heard before that price and quantity demanded have an inverse relationship. We all witness this relationship in real life: when a product’s price increases, its quantity demanded decreases. For instance, if they increase the price of eggs, people will buy lesser eggs than usual. However, they won’t avoid buying it altogether. The same is the case with warm clothes, milk, transport, and other necessities that we cannot live without.
In 2020, as Covid-19 spread around the world and everyone expected a lockdown, people started buying more eggs. The demand increased, but the production was the same, so everyone witnessed an unexpected shortage. As a result, the price went up.
The supply of eggs is likely to be price elastic as eggs’ production time is expected to be short because eggs are mass-produced on an automated production line. Therefore, the change in demand for eggs is likely to cause the price to rise by a small extent and quantity to increase vastly.
Supply And Price Elasticity of Demand
There are a lot of examples of the direct relationship between price and quantity supplied as well. When the price of eggs rises, the production will increase automatically. Therefore, firms will produce more eggs. Due to Covid-19, there was a rise in production cost, so there was a lesser supply.
Checklist of concepts
There are a few concepts and key points that are mandatory for all the candidates sitting for their A level economics examination. Here are some of the important ones:
- Explaining how the Singapore government can use the concepts of elasticity for their economy
- Explain the price elasticity of demand and income elasticity of demand, and why are there different elasticities
- Differentiate between price, cross, and income elasticities of demand
Why is Demand and Supply important?
Some students avoid attempting the demand and supply questions as they fear making the wrong analysis. However, they should not have this fear. Here are a few reasons explaining the importance of this topic.
- The case study section will almost certainly have a question on demand and supply. Usually the examiner will ask you to analyse the situation. Questions on this topic are on the trending list.
- The essay part can contain a demand and supply question. If you have expertise on this topic, you can easily attempt the micro-essays as well. We can never be certain how difficult the market structure and market failure questions will be.
Anthony Fok at JCEconomics is well-versed in teaching this topic to students. These questions test the concepts of the students. Therefore, Mr Fok tutors his students to break down the problem to solve the questions. Moreover, he explains all the concepts himself through real-life examples. The proof of his excellent tutoring is evident through his students’ results. Find more about this economics guru and his tuition center through the website: BESTECONSTUITION.COM