by using dynamic pricing or price surging. when demand is high, eg. New Years then prices are increased sharply, this lowers demand and discourages consumers. Higher fares mean that dormant drivers start driving again so supply of drivers increases and amplifies the removal of excess demand. when supply and demand get closer then the timings are restored back to normal levels.
what market forces can be used to remove excess supply?
lowering prices to increase demand. or storing stock to release to the market later on but this might mean that food could go bad, storing would costmoney.
how does a shift in supply AND demand impact market equilibrium?
if you know by how much, the graph can be redrawn to show the new market equilibrium. if D shifts out and S shifts in, then the new market equilibrium shows that less is sold at a higher price.
how does a shift in supply impact market equilibrium?
When S increases, P will fall, S graph shifts to the right, there is a new market equilibrium as more is being bought at a lower price while demand does not change (on the graph).
how does a shift in demand impact market equilibrium?
when D increases, P will rise, D shifts to the right, there is a new market equilibrium as more is being bought at a higher price but supply is unchanged (on the graph).
a payment provided by a government to businesses to encourage the production of a good or service such as biofuels which are more environmental friendly.
what is an example of when new technology was used to shift supply?
in 2014 when the price of oil fell sharply, oil companies began to use lasers and other technology to measure potentialyield from oil wells or technology used help produce more oil from older wells.
the price where Supply = Demand, with no surplus or shortages, this is the marketclearing price meaning that everything being supplied is bought which means it is in balance.
QS is influenced by COP, if price is fixed and the cost of raw materials increases and COP rises then supply will fall, the graph shifts to the left. whereas if costs fall then supply increases as it is more profitable. the supply curve shifts to the right. A shortage of the CELL factors will make it difficult to produce, cause prices rise and shift supply to the left.
this affects agricultural products the most. better growing conditions mean good harvest and improves crop yield, shifting supply to the right. excess supply means supplying more at lower prices poor growing conditions such as natural disasters, bad weather and pests can increase price and would shift supply to the left.
They encourage production of specific goods/services. for example specific agricultural products. The subsidies reduce production costs and supply shifts to the right.
improvements in technology increases efficiency and improves the production process whilst lowering the COP so firms are likely to offer more goods for sale. graph shifts right.
indirect tax are taxes from the government such as VAT, when imposed they shift the graph to the left as firms face higher costs and price increases, meaning it is less worthwhile for the business to produce it. This increases government revenue and discourages consumption of harmful products. Cigarettes and harmful goods have higher tax however if people are addicted they may continue to purchase regardless of price.