Photo AI
Using the data in Extract E, draw a demand and supply diagram to show the likely effects of the estimated change in population for the 40–59 age group on the USA coffee market. - Edexcel - A-Level Business - Question 2 - 2019 - Paper 1
Question 2
Using the data in Extract E, draw a demand and supply diagram to show the likely effects of the estimated change in population for the 40–59 age group on the USA cof... show full transcript
Worked Solution & Example Answer:Using the data in Extract E, draw a demand and supply diagram to show the likely effects of the estimated change in population for the 40–59 age group on the USA coffee market. - Edexcel - A-Level Business - Question 2 - 2019 - Paper 1
Step 1
Draw the Demand and Supply Diagram
Answer
Begin by drawing the standard X and Y axes. Label the vertical axis 'Price' and the horizontal axis 'Quantity'. Next, draw an upward-sloping supply curve (labeled as S) and a downward-sloping demand curve (labeled as D) intersecting at point P. This initial intersection point represents the original equilibrium price (P) and quantity (Q) of coffee.
Step 2
Shift in Demand Curve
Answer
Since the population change for the 40–59 age group is a decrease in growth (indicated by the negative percentage), this demographic shift will likely decrease the demand for coffee among this age group. Therefore, draw a new demand curve (D1) to the left of the original demand curve (D).
Step 3
Identify the New Equilibrium
Answer
The intersection of the new demand curve (D1) with the original supply curve (S) will create a new equilibrium point (P1) at a lower quantity (Q1). Label this new equilibrium price and quantity accordingly to indicate the expected decrease in demand for coffee resulting from the population changes.