The document discusses how commodity prices are determined by the balance of supply and demand in the market, and provides examples of how changes in supply or demand can affect prices. It also defines commodity and normal markets, noting that commodity markets involve raw materials where the producer has limited price control, while normal markets involve secondary products where sellers can influence the market through marketing and production methods. Finally, it addresses how fluctuations in raw material and energy costs can impact small businesses.
2. Specification Detail
The prices of commodity
markets are determined by the
balance between supply and
demand
The difference between
commodity markets and normal
markets
The effect on small firms of price
changes in raw materials and
energy costs
4. Supply affecting price
Example: At a price one of you can have no homework
for the rest of the year. How much is this worth?
What will happen to the price if 4 of you can have no
homework for the rest of the year?
5. Task: Write the title and draw the
following diagram.
Explain how this graph would describe the price of
Glastonbury tickets.
6. Demand affecting price
Example: What if Muhammad brought in a new camera that
could copy from any source and be printed on paper.
What would happen to price if everyone liked it and wanted
it?
What would happen if a week later, a teacher told you it
wasn’t allowed at school?
7. Task: Write the title and draw the
following diagram.
Explain how this graph would describe the price of
Glastonbury tickets.
8. 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?
11. Commodity Market
Defined: A commodity market involves raw or primary
products. This is important because it means you could
swap 1xunit with another 1xunit and it would be valued the
same. When it is exchanged the producer limited control
the 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)
13. Normal Market
Defined: A normal market involves secondary or
tertiary products. The seller can have some control
over the market. For example by applying methods of
marketing (advertising) and production(changing the
quality of the item).
For example:
Phones
Fashion items
Soft drinks
Accessories
15. Effect on small businesses
Describe how a change in the price of raw
materials or energy will affect a small business.
Raw Materials
Variable Costs:
Energy Costs
Fixed Costs: