Describe and explain the factors that determine supply and demand, and use diagrams to support your answer.

Factors of Demand:Taste, Substitutes, Complements, Necessity, Income Factors of Supply:Raw materials. Labour, Tax, Weather
students will pick one type of shift they will analyse.
Once key factors are determined students will be expected to write which factors create a right and left shift in demand and supply. Diagrams must be drawn. An outward shift in demand will be caused by:Increased taste of a good, Price of substitute rising, Price of complement falling, Incomes rising. If a good is a necessity, a link to price elasticity of demand will be expected, as it is an inelastic good and is less effected by price changes. Demand will somewhat always be rising. Explanation of why demand rises as these factors change. e.g. incomes rise so people have more disposable income to spend on goods. Inward shift is determined visa versa.
An outward right shift in supply is determined by: Fall in price of raw materials, fall in labour costs, fall in taxes and a good weather season. A fall in these factors will increase supply because prices fall. Firms have a greater productive potential as their costs have fallen per unit and their output has increased from Q1 to Q2.