Questions on profile three - Pt 4
Yvonne Harvey, Contributor

Members of the Glenmuir High Quiz team at TVJ on Tuesday, March 21. - Ricardo Makyn Photo

HI EVERYONE. I do hope that the questions we have been looking at for the past few weeks have been interesting and that you have also learnt something from the discussions and guideline answers that I presented on these questions.

This week, the question surrounds demand and supply as I indicated last week. Before I give you the question I will outline the main areas of this topic that you will need to know, not only to be able to answer this question, but in order to be able to tackle any demand and supply question.

Candidates should be able to:

• Define demand and supply
• State and illustrate by schedules and graphs, the five laws of demand and supply
• Explain the effects of prices set above and below the equilibrium price
• Explain the effects of changes in price on demand and supply
• Explain the effects of shifts in the demand and supply curves
• Discuss the factors (price and non-price factors) that influence demand and supply
• Explain and give examples of cases of exceptional demand and exceptional supply.

You may wish to revise these areas of demand and supply before attempting the question.

For demand and supply, it is also important that you are able to draw related graphs and explain any graphs given to you.

QUESTION

Now for the question which is taken from CXC past paper, January 2005, General, Section 1, question 3. This is a compulsory question.

(a) Define the term 'demand' in economic terms. (2 mks)

(b) Outline three factors, other than price, that may cause a decrease in the demand for ice cream. (6 mks)

(c) Discuss three measures that can be taken by producers to raise the demand for ice cream over a period of time. (6 mks)

(d) Outline three factors, other than price, that may cause a decrease in the supply of beef. (6 mks)

Total 20 marks

DISCUSSION AND GUIDELINE ANSWER

(a) You should remember that demand is different from need in that it is always related to price and time. Therefore, demand in economic terms is defined as the quantity of goods and or services required by consumers, at a particular price, and at a particular time.

(b) Please note that price will not be accepted as an answer. The question is asking for he non-price factors of demand. These include: weather conditions, taste and preferences, fashion, price of substitutes such as icicles and yoghurt, changes in real income, changes in taxation, etc.

You are asked to outline the factors, therefore, you should give some detail on the factors for full marks. For example, you could say that in the case of weather conditions, demand for ice cream would decrease if the weather suddenly became cold and rainy. Since ice cream is normally cold, it would not be appetising in a cold and rainy season.

(c) The measures that can be used to increase the demand for ice cream over a period include: advertising, which if successful will raise demand and at the same time make it more inelastic; sales promotions, e.g., free cones or buy-one-get-one-free campaigns; more appealing packaging; introduction of new and tasty flavours; use the ice cream to sponsor events, e.g., sporting and cultural events; the use of non-fattening ingredients for the health conscious and discounts on sales of the ice cream.

Note that the question asks you to discuss the measures for full marks.

(d) The factors other than price that may cause a decrease in the supply of beef include: an increase in the cost of raising cows. For example, an increase in the cost to buy feed for the cows; drought or other poor weather conditions; increased taxation on farmers; farmers consuming more of their own beef; decrease in the number of farmers in the industry; disease causing the death of a number of cows, etc. The factors must be clearly outlined for full marks.

Well folks, I am through for this week. Next week I am going to discuss nationalisation. This topic can be taught when looking at types of public sector businesses as nationalised industries is one type. It should be revised at the end of profile three unit X111 where you are required to discuss the advantages and disadvantages of nationalisation.

See you next week.

* Yvonne Harvey teaches at Glenmuir High School.