• Join over 1.2 million students every month
• Accelerate your learning by 29%
• Unlimited access from just £6.99 per month
Page
1. 1
1
2. 2
2
3. 3
3
4. 4
4
5. 5
5

# In my application of theory I have spoken about certain things making demand rise

Extracts from this document...

Introduction

A market is a meeting of buyers and sellers, where goods/services are exchanged for other goods and services. It is therefore a system of exchange based on demand, supply and price. The exchange is normally indirect, the items being exchanged for money. Therefore houses would be bought for money. This money can be used to buy more houses. Money acts as a medium of exchange and a measure of value. Demand is the amount of people willing to purchase a good or service at a given price. The fundamental law of demand is that an increase in price will result in a decrease in quantity demanded whereas a decrease in price will results in an increase in quantity demanded. I have shown this below using a demand curve. The graph shows that 30,000 items are demanded when the price is �10. If the price falls to �5 quantity demanded will increase to 40,000. The curve can only be drawn when the price elasticity of demand of the product is known. ...read more.

Middle

A change in supply will occur if the price of a good changes. This is determined by the demand for a good. This can be shown using a graph. A) INCREASE IN SUPPLY B) DECREASE IN SUPPLY A - a change from S1 to S2 shows that at a price of �10, businesses will supply 35,000 items. B - a fall from S1 to S3 means that firms will only supply 25,000 items. Ultimately the relevance of demand and supply curves is that when combined we can calculate the market price. The equilibrium market price is �10 and consumers demand and producers supply 30,000 items. Prices can move freely. For example if the price rose to �15. - Consumers demand 20,000. - But producers supply 40,000. - Thus creating a surplus. - This causes the price to fall. - This causes an increase in quantity demanded. - And reduces quantity supplied. - Equilibrium is re-established. Although in this explanation of supply and demand I have looked at goods of a lower value than houses the same theory applies but on a larger scale. ...read more.

Conclusion

After the rise we can see there is an upward shift. This is illustrated by demand 2. Nevertheless we should note there is only a small change in supply. This is because the supply of housing in the market is fairly inelastic. This is because it takes people time to realise that they could make a good return on their property by putting it on the market. Also some people may want to wait until the market is at its peak. When there is such a shift in demand we can see a colossal rise in prices yet little change in the quantity of houses traded. It is only when the supply is increased that this rise in price is curbed. The diagram can observe this. Clearly as supply is increased the price falls. This concept also draws on the issue that I have raised about house builders keeping supply low so that prices remain high. If they were doing this, it would make sense as most businesses objectives' are predominantly about profit maximisation. This is the desire to make the greatest return on capital employed. Nevertheless I question whether they are deliberately doing this. I have argued this case further in my conclusions. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level Marketing & Research section.

## Found what you're looking for?

• Start learning 29% faster today
• 150,000+ documents available
• Just £6.99 a month

Not the one? Search for your essay title...
• Join over 1.2 million students every month
• Accelerate your learning by 29%
• Unlimited access from just £6.99 per month

# Related AS and A Level Marketing & Research essays

1. ## Unit 2 Investigating business

To find out and average on what to pay my employee's I used a website which tells me the minimum wage for the exact job that they will be doing within the business. (www.payscale.com) My employee's will be working roughly 6 days a week with 5 week annual holiday.

This would be very stressful for the business owner, as they know that the business rests on their head, and if they begin to make mistakes, especially near the beginning, the business will soon close down.

1. ## Aravind Eye Hospital - Case

training centre named Lions Aravind Institute of Community Ophthalmology (LAICO); a centre for ophthalmic research named Aravind Medical Research Foundation; a research centre for women and children named Aravind Centre for Women, Children and Community Health; and an international eye bank named The Rotary Aravind International Eye Bank.

2. ## Understand the concept and principals of marketing and their application in the business environment.

Poppets don't use this method of distribution because the product is fast moving and need to sell in high quantity very quickly. The evidence of this point is that on Fox's website it has a list of the retailers where Poppets are sold.

1. ## GLOBAL STEEL INDUSTRY DEVELOPMENT

and other export promotion schemes. The most important move in the new Exim Policy is the reduction of transaction time for exporters by introduction of a new eight digit commodity Classification in line with imports. Under Advance Licensing, the new policy abolishes Duty Exemption Entitlement Certificate (DEEC)

2. ## Impact on Automobile Industry Due To Recession in India

This leads to the simple definition of a depression as a recession that lasts longer and has a larger decline in business activity. The Difference So how can we tell the difference between a recession and a depression? A good rule of thumb for determining the difference between a recession

1. ## SunCity - developing marketing strategy for problem

This may be a bit more difficult to carry out than the managers, for example only 2 staff are on at one time, plus a manager, this means I will have to go into the salon several times to get a varied opinion from different members of staff, this will ensure accuracy and not a biased opinion.

2. ## Business Enterprise unit 5

My aim is also to be the biggest business in that sector and in that area and look to expand my business to make it global in the future. (b) The potential choices of self employment businesses are: Car wash service: Everyone who own a car needs to wash and

• Over 160,000 pieces
of student written work
• Annotated by
experienced teachers
• Ideas and feedback to