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
To illustrate the effects of the estimated change in population for consumers aged 40–59, start by sketching the axes for the demand and supply diagram. The vertical axis should represent the Price of coffee, while the horizontal axis indicates the Quantity of coffee.
Next, plot the initial demand curve (D) and supply curve (S). Ensure both curves are correctly labeled.
Given the change in population between 2020 and 2040 indicates a decline in consumers aged 40–59, we will show that this demographic's demand for coffee is likely to decrease. This can be represented by shifting the demand curve to the left (D1).
Mark the original equilibrium point (P, Q) where the initial demand and supply curves intersect.
Step 2
Interpret the Shift in Demand
Answer
As the demand curve shifts from D to D1, it indicates a decline in demand for coffee among the 40–59 age group. This leftward shift suggests that less quantity of coffee will be demanded at the same price levels.
Label the new equilibrium point where the new demand curve (D1) intersects the supply curve (S). Denote this new price as P1, corresponding to a new quantity of Q1.
Step 3
Analyze the New Equilibrium
Answer
After the demand curve shifts left, the new equilibrium price (P1) is determined where the new demand curve (D1) intersects the supply curve (S). This equilibrium demonstrates the expected decrease in both price and quantity sold in the coffee market due to the reduced demand from the aging population in this age group.
Make sure to note these changes clearly on the graph, emphasizing the decrease in price and quantity.