Market demand compared with supply

The prices of commodity markets are determined by the balance between supply and demand

The difference between commodity markets and normal markets

The effect on small firms of price changes in raw materials and energy costs

Specification Detail

Example: Glastonbury tickets

Price determined by supply and demand

Example: At a price one of you can have no homework for the rest of the year. How much is this worth?

What will happen to the price if 4 of you can have no homework for the rest of the year?

Supply affecting price

Explain how this graph would describe the price of Glastonbury tickets.

Task: Write the title and draw the following diagram.

Example: What if Muhammad brought in a new camera that could copy from any source and be printed on paper. What would happen to price if everyone liked it and wanted it?

What would happen if a week later, a teacher told you it wasn’t allowed at school?

Demand affecting price

Explain how this graph would describe the price of Glastonbury tickets.

Task: Write the title and draw the following diagram.

Using the following product, answer the following 4 questions:

1. If there is too much of this item/product?2. If there is too little of this item/product?3. A surge of interest and everybody wants it?4. A decline in interest and nobody wants it?

Extension TASK

Supply and demand dataHere

HOMEWORK

Farming: Here

Banana Farming: Here

Supply and Demand

Defined: A commodity market involves raw or primary products. This is important because it means you could swap 1xunit with another 1xunit and it would be valued the same. When it is exchanged the producer limited control the price, or the market.

Examples include: Metal (for cars), Copper (for electronics), Aluminium (for

making aircraft) Cotton, wool and nylon (for clothing) Sugar, Coffee, Cocoa (food)

Commodity Market

ROLE PLAY

Is money a commodity?

Defined: A normal market involves secondary or tertiary products. The seller can have some control over the market. For example by applying methods of marketing (advertising) and production(changing the quality of the item).

For example: Phones Fashion items Soft drinks Accessories

Normal Market

Similar Different

Difference between Commodity Market and Normal Market

Describe how a change in the price of raw materials or energy will affect a small business. Raw Materials

Variable Costs: Energy Costs

Fixed Costs:

Effect on small businesses