Unit 4 Business Environment - Investigate the behaviour of organisations and the market environment
Supply and demand
“an economist is somebody who knows the price of everything and the value of nothing”
In every market there is a demand for the product and a supply of that product.
What is Demand?
Demand can be best defined as the quantity of a good or service demanded by consumers at each price level. Demand is the willingness of the consumer to want and to pay for that good or service at that price level.
Factors which Influence Demand
- changes in income
- tastes and fashion
- price of other goods
- seasonal variations
- marketing
In a business to business market, the "consumer" can be another business.
What is Supply?
Supply can be best defined as the quantity of a good or service supplied by suppliers at each price level. Supply is the willingness of the supplier to supply and sell that good or service at that price level.
Factors which Influence Supply
- cost of raw materials
- cost of labour
- cost of capital
- competition
Equilibrium
When the quantity supplied is equal to the quantity demanded we have equilibrium.
