Specification DetailThe prices of commoditymarkets are determined by thebalance between supply anddemandThe difference betweencommodity markets and normalmarketsThe effect on small firms of pricechanges in raw materials andenergy costs
Price determined by supply and demand Example: Glastonbury tickets
Supply affecting priceExample: At a price one of you can have no homeworkfor the rest of the year. How much is this worth?What will happen to the price if 4 of you can have nohomework for the rest of the year?
Task: Write the title and draw the following diagram.Explain how this graph would describe the price ofGlastonbury tickets.
Demand affecting priceExample: What if Muhammad brought in a new camera thatcould copy from any source and be printed on paper.What would happen to price if everyone liked it and wantedit?What would happen if a week later, a teacher told you itwasn’t allowed at school?
Task: Write the title and draw the following diagram. Explain how this graph would describe the price of Glastonbury tickets.
Extension TASK Using the following product, answer the following 4 questions:1. If there is too much of this item/product?2. If there is too little of this item/product?3. A surge of interest and everybody wants it?4. A decline in interest and nobody wants it?
Supply and DemandFarming: HereBanana Farming: Here
Commodity MarketDefined: A commodity market involves raw or primaryproducts. This is important because it means you couldswap 1xunit with another 1xunit and it would be valued thesame. When it is exchanged the producer limited controlthe price, or the market.Examples include: Metal (for cars), Copper (for electronics), Aluminium (for making aircraft) Cotton, wool and nylon (for clothing) Sugar, Coffee, Cocoa (food)
Normal MarketDefined: A normal market involves secondary ortertiary products. The seller can have some controlover the market. For example by applying methods ofmarketing (advertising) and production(changing thequality of the item).For example: Phones Fashion items Soft drinks Accessories
Difference betweenCommodity Market and Normal Market Similar Different
Effect on small businessesDescribe how a change in the price of rawmaterials or energy will affect a small business. Raw Materials Variable Costs: Energy Costs Fixed Costs: