The Economy: Supply and Demand – GCSE Business Studies Revision

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What’s that?

  • The economy is just one of those factors affecting a business which its owners have no control over (unless they’re those banker people who ruin things)
  • The Economy is the wealth and resources of a region or country, taking into account their goods and services
  • It’s a term used for all the people buying and selling things in that area
  • The Economic Activity is the amount of buying and selling that happens in that area in a set amount of time

Keyword Definitions

  • Exports are something produced in a country and sold outside the country
  • Imports are exports from another country that are being bought into a country
  • Exporting is selling things out of the country
  • Importing is buying things in to the country
  • It’s that simple
  • Consumer spending is the total amount spent throughout the country

Commodities and Goods

  • Commodities are raw materials… such as wheat or redstone ore
  • People make (craft) products, or goods, from commodities
  • Metal may be a commodity, but a pair of scissors made from it is a good
  • Goods are sold on goods markets, where the prices don’t change too much
  • Commodities are sold on commodity markets, where the prices go up and down a lot according to the supply and demand
  • (I refuse to write “demand and supply, even though that would make more sense, because the phrase people quote is “supply and demand”)

Supply and Demand

  • Demand is the amount of something that people want
  • The amount they’re willing and able to purchase at a given price
  • Supply is the amount of something that is available
  • The amount sellers can actually sell at a given price

Shortage and Surplus

  • If there is more demand for a commodity than there is supply, there is a shortage of that commodity
  • This means prices will rise: you have to pay more for something if there’s a shortage
  • If the supply for something exceeds the demand (i.e.there’s more than people want), there is a surplus
  • This means the prices will fall because people will sell the commodity for less just to get it sold
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5 Responses to The Economy: Supply and Demand – GCSE Business Studies Revision

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