Answers: Section A:
The Market System
(a) In all of the photographs goods are being traded. In A, people are buying goods from market traders in a souq. In B, goods are being sold by auction. In C, shoppers are buying goods from a supermarket. And finally, in D, cars are being bought at a car lot.
(b) In C, shoppers queuing at a checkout will pay the price that is displayed on the labels of products (or at the point of sale). Shoppers will either pay the price shown or choose not to buy the various products. In D, the price is determined through negotiation between the car salesperson and the buyer. There is likely to be a price displayed for the car but this is usually a starting point for negotiations to begin. The…show more content… Demand is forcing up the price. On the other hand, if there are only a few bids this means that demand is low and the price of the product will also be low. If there are no bids at all this means that there is no demand and the product will go unsold.
Sometimes on eBay there may be lots of people selling the same or very similar products. This means that supply is high and the effect will be to lower prices.
(a) According to the table, when the price of fleeces is $50, 5,000 fleeces will be purchased per week.
(b) As the price of fleeces goes up the number purchased per week falls. For example, when the price is increased from $50 to $70 the number of fleeces likely to be purchased falls from 5,000 to 3,000.
(c) When the price of fleeces is lowered, the number purchased per week rises. For example, if the price is reduced from $50 to $40 the number of fleeces likely to be purchased rises from 5,000 to 6,000.
(a) If the rugby union club charges 40 Euros for a fixture, the attendance would be 5,000.
(b) To fill the stadium the price must be set at 10 Euros. At 10 Euros 30,000 spectators would be attracted. This is full capacity.
Exam practice – The Byron Bay Surf Shack:
(a) Effective demand shows how much would be bought (i.e. how much people can afford to buy and would actually buy) at any given price. It does not mean how much people would like to buy