OxfordAQA International GCSE Economics: Demand, supply and equilibrium price (9214) – Revision Notes

These notes condense sections 3.1.3.1 to 3.1.3.3 of the OxfordAQA International GCSE Economics (9214) specification (Paper 1, How markets work) for exams from May/June 2025 onwards. For full explanations read the study guide. Then test yourself with the practice questions. All figures are invented for illustration.

More: the course hub, the printable checklist, the wider markets notes and the free diagnostics.

Key definitions

Term	Meaning
Demand	Amounts buyers will actually take, with money to pay, at each price in one period
Supply	Amounts sellers will actually bring to market at each price in one period
Equilibrium price	Price where the amount wanted equals the amount offered
Excess demand	Quantity demanded is greater than quantity supplied (a shortage)
Excess supply	Quantity supplied is greater than quantity demanded (a surplus)
Revenue	Price × quantity sold

3.1.3.1 Demand: what to recall

• The curve slopes downward: a lower price means a greater quantity demanded.
• Own price changes cause a movement: extension (price falls) or contraction (price rises).
• Other factors shift the whole curve: income, tastes and advertising, prices of related goods, population, expectations, seasons and events.
• Right shift = increase in demand. Left shift = decrease in demand.

Method: build an individual demand curve

1. Price on the vertical axis, quantity per period on the horizontal axis.
2. Plot each (quantity, price) pair.
3. Join the points; the line falls left to right.
4. For market demand, add all buyers’ quantities at each price.

Small reminder (illustrative): a buyer takes 2, 4 and 7 cakes at 9, 6 and 3 cu. Plot (2, 9), (4, 6), (7, 3). A second buyer takes 1, 3 and 5. Market demand is 3, 7 and 12.

3.1.3.2 Supply: what to recall

• The curve slopes upward: a higher price makes more output worth producing.
• Own price changes cause extension or contraction along the curve.
• Other factors shift the curve: costs of production, technology, taxes and subsidies, number of firms, weather and natural events, expectations.
• Right shift = increase in supply. Left shift = decrease in supply.

Method: build a firm’s supply curve from production data

1. Work out the extra cost of each extra batch (difference in total cost).
2. Divide by the batch size to get the extra cost per unit.
3. The price needed to supply that batch equals the extra cost per unit.
4. At any price, supply every batch whose extra cost per unit is at or below it.
5. Plot price against the quantity and join the points.

Small reminder (illustrative): a workshop’s extra costs per unit for batches of 10 are 3, 4 and 6 cu. At a price of 5 cu it supplies 20 units, because the third batch costs 6 per unit. If costs rise by 2 cu per unit on every batch (5, 6 and 8), the curve shifts left and at 5 cu supply falls to 10.

3.1.3.3 Equilibrium price

Method: find equilibrium and test other prices

1. Find the price where the two quantities match. This is where the curves cross.
2. Below it, demand is greater: excess demand. Buyers compete and price rises.
3. Above it, supply is greater: excess supply. Unsold stock forces the price down.
4. As price moves, quantity demanded and quantity supplied adjust until they match.

Method: effect of a change (the four-step chain)

1. Name the curve that shifts and give the cause (a change in a factor, not in the price).
2. State the direction, left or right.
3. State the gap at the starting price: buyers want more, or sellers offer more.
4. State the new price and quantity, using movement along the other curve.

Change	Price	Quantity
Demand increase	Up	Up
Demand decrease	Down	Down
Supply increase	Down	Up
Supply decrease	Up	Down

Both curves shifting: the effect on one variable is fixed and the other depends on the sizes. A demand rise with a supply fall always raises price; quantity rises or falls depending on how large the two shifts are.

Showing revenue on a diagram

• Revenue = price × quantity. It is the rectangle from the origin to the price and quantity.
• At a price above equilibrium, use the quantity demanded (the smaller number). Below equilibrium, use the quantity supplied.
• A firm’s revenue uses its own quantity at the market price.

Worked reminder

Market for notebooks, Country B (illustrative), price 2 to 6 cu: demand 90, 70, 50, 30, 10; supply 10, 30, 50, 70, 90.

• Equilibrium: 4 cu and 50 notebooks. Revenue 4 × 50 = 200 cu.
• At 6 cu: excess supply 90 − 10 = 80. Quantity traded is 10. Revenue 60 cu.
• At 2 cu: excess demand 80. Quantity traded is 10. Revenue 20 cu.

Worked reminder: a shift

Take the notebook market again. A school campaign adds 20 to demand at every price, so demand is 110, 90, 70, 50, 30.

• Chain: demand shifts right; at 4 cu demand is 70 against supply of 50, so excess demand is 20; price rises.
• At 5 cu demand is 50 and supply is 70, so the equilibrium lies between 4 and 5 cu. Joining the points with straight lines, both quantities are 60 at 4.5 cu: 4.5 cu and 60 notebooks.
• Revenue rises from 200 cu to 4.5 × 60 = 270 cu.

Command words

• State/Identify: one fact, no reason needed.
• Calculate: show the working, then give units.
• Explain: give a cause, then a consequence, then link back to the question.
• Evaluate: weigh both sides and reach a judgement, using a limit of the model that fits the context.

Real markets

Market	Feature	Usual diagram point
Event tickets	Fixed seats	Supply vertical; demand shifts change price only
Farm produce	Weather affects harvest	Supply shifts; price swings
Housing	Slow to build	Supply slow to respond to demand
Seasonal goods	Demand varies by season	Regular shifts of demand

Limits of the model: many things change at once, supply takes time to respond, prices may be fixed by contracts, and governments or firms with market power can interfere.

Must-know distinctions

• Extension/contraction (own price, movement) versus increase/decrease (other factors, shift).
• Quantity demanded is one point; demand is the entire curve.
• Excess demand (price rises) versus excess supply (price falls).
• Supply curve (willingness to sell) versus revenue (money received).

Quick self-test

1. Define supply in your own words.
2. A rise in the good’s own price: movement or shift, and of which curve?
3. Buyer A takes 4 units at 10 cu and 9 at 5 cu. Buyer B takes 6 and 11. Find market demand at each price.
4. Extra costs per unit for three batches of 10 are 3, 4 and 6 cu. How many units are supplied at 5 cu?
5. Price (cu) 1 to 5: demand 50, 40, 30, 20, 10; supply 10, 20, 30, 40, 50. State equilibrium, then the excess at 1 cu and at 5 cu.
6. Suppose buyers in question 5 want 20 more at each price. Find the new equilibrium.
7. Calculate revenue at 3 cu in question 5, and in question 6 after the shift.
8. In question 5, what is revenue at 5 cu?
9. Does a fall in the cost of materials shift supply left or right?
10. Why is quantity uncertain when demand rises and supply falls?

Answers

1. The amounts sellers will bring to market, covering their costs, at each price in one period.
2. A movement along the curve, never a shift: an extension of supply, or a contraction of demand.
3. 10 units at 10 cu; 20 units at 5 cu.
4. 20 units. The third batch costs 6, which is above 5.
5. Equilibrium 3 cu and 30 units. At 1 cu, excess demand 50 − 10 = 40. At 5 cu, excess supply 50 − 10 = 40.
6. New demand 70, 60, 50, 40, 30. It matches supply at 4 cu: 40 units.
7. 3 × 30 = 90 cu. After the shift, 4 × 40 = 160 cu.
8. Only 10 units sell (demand): 5 × 10 = 50 cu.
9. Right. Lower costs raise supply at every price.
10. The demand rise pushes quantity up and the supply fall pushes it down. The result depends on how large the two shifts are.

Where marks are usually lost

• Describing a price change as a shift of the curve.
• Missing the step that names the gap at the starting price.
• Drawing the right shift but labelling a left shift in the words.
• Using the wrong quantity for revenue away from equilibrium.
• Giving a price but no quantity, or the reverse, when both are asked for.
• Plotting price on the horizontal axis.
• Listing a determinant without saying which way it moves the curve.
• Ignoring the context: a generic answer rather than the market in the question.
• Applying the model without any limit when asked to evaluate.

Official syllabus

OxfordAQA International GCSE Economics (9214), specification Version 1.0, first teaching September 2023, first examined May/June 2025. Published by OxfordAQA.