1.2.3 Markets

• What is one factor that can lead to an increase in supply?

  A decrease in production costs
• What happens to demand for a product when its price decreases?

  Demand usually increases
• What is market mapping used for?

  To identify product positioning in the market
• How can a company add value to its product?

  By improving quality or customer service
• What is competitive advantage?

  What makes a company better than competitors
• How do supply and demand determine prices?

  They set price levels for goods and services
• What happens if demand for a product increases while supply remains constant?

  Prices will likely rise
• What occurred during COVID-19 regarding demand for hand sanitizer?

  Demand surged while supply remained constant
• Why do businesses analyze supply and demand?

  To predict quantities to produce or stock
• How does Zara manage its production and inventory?

  By using real-time customer demand data
• What might a business do during high demand periods?

  Raise prices to increase profits
• How does Ryanair adjust ticket prices?

  Using dynamic pricing based on demand
• What is the law of demand?

  As price increases, quantity demanded decreases
• What does the supply curve typically look like?

  Upward-sloping, showing supply increases with price
• What happens if there is excess demand in a market?

  Prices would likely increase
• What is supply?

  The quantity producers are willing to sell
• What is demand?

  The quantity consumers are willing to buy
• What is equilibrium in a market?

  Where quantity supplied equals quantity demanded
• What does the demand curve look like?

  Downward sloping, indicating price and demand relationship
• What does the supply curve look like?

  Upward sloping, indicating price and supply relationship
• What happens in the case of excess supply?

  Producers lower prices to clear surplus
• What happens in the case of excess demand?

  Producers raise prices to decrease demand
• What are the effects of a drought on cocoa supply?

  • Decreases cocoa supply
  • Affects chocolate production
  • Causes potential price increases
• What happens when more people want electric cars?

  • Rightward shift in demand curve
  • Increased demand for electric cars
  • Potential price increases
• What are the consequences of surplus in a market?

  • Excess supply occurs
  • Producers lower prices
  • Demand increases, moving towards equilibrium
• What are the consequences of shortage in a market?

  • Excess demand occurs
  • Producers raise prices
  • Supply increases, moving towards equilibrium