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Inside Collection (Course): Economic and Management Sciences Grade 9
In order to make bartering and business transactions possible, it is necessary that the value of a product be expressed by the dealer in terms of a monetary amount, or as we know it, a price. It is common for us to walk into a shop and compare the prices of products on the shelves in order to decide which product(s) we want to buy. However, the question is: How are these prices determined?
The price that is given to a product by a dealer depends on (1) the price that he paid for the product and (2) the price at which he is prepared to sell the product. This raises the principle of DEMAND for a product or products at a specific price, in a specific quantity or number (of the product) and at a specific time. As a simple example one can refer to the municipal fresh produce market or an auction where livestock is sold. Note that at such markets the sellers and the prices that they ask for their products, as well as the number of products available, can differ from day to day.
The following data are given concerning the SUPPLY of cabbages on the municipal fresh produce market:
| PRICE PER CABBAGE | NUMBER SUPPLIED |
| R0.80 | 400 |
| R0.70 | 350 |
| R0.60 | 300 |
| R0.50 | 200 |
| R0.40 | 100 |
Make use of the data supplied in the table above and draw the supply curve. Insert it on a separate page.
From this the LAW OF SUPPLY can be deduced, which states that “the number / quantity of goods that are offered will rise in proportion to rises, in the price and vice versa, namely that the number / quantity supplied will fall when the price shows a decline”.
Draw up a list of the factors that will influence the number / quantity supplied.
| 1…………………………………………………… | 6………………………………………………….. |
| 2. | 7. |
| 3. | 8. |
| 4. | 9. |
| 5. |
The price that a consumer is willing to pay for a product depends mainly on (1) how urgent his need is and (2) the amount of money that the consumer has available. Here we have to do with the DEMAND for a product or products that is / are valid at a specific price, in specific numbers / quantity and at a specific time. Once again it is possible that the indicated prices and numbers / amounts may differ from day to day.
The following data concerning the DEMAND for cabbage on the municipal fresh produce market on 14 January are also supplied:
| PRICE PER CABBAGE | NUMBER SUPPLIED |
| R0.80 | 150 |
| R0.70 | 200 |
| R0.60 | 300 |
| R0.50 | 450 |
| R0.40 | 650 |
Make use of the data supplied in the table above and draw the demand curve. Insert it on a separate page.
From this the LAW OF DEMAND can be deduced, which states that “the number / quantity demanded will rise in proportion to the decline in price, and vice versa, namely that the number / quantity demanded will fall when the price shows an inclination to rise”.
Draw up a list of the factors that will influence the number / quantity demanded.
| 1…………………………………………………………… | 6………………………………………………… |
| 2. | 7. |
| 3. | 8. |
| 4. | 9. |
| 5. |
When the above-mentioned supply and demand curves are drawn on the same axis, we see that the two curves meet at a specific point, namely when the price is R0,60, the sellers are prepared to supply 300 heads of cabbage and the buyers are prepared to purchase 300 heads of cabbage at that price. This price is known as the MARKET EQUILIBRIUM PRICE
and it represents the price at which the buyer and the seller are prepared to barter. At any other price the parties will not be able to agree and they will not be prepared to conclude a transaction.
Use the data that are supplied above and draw the Supply and Demand Curve on the same axis system: (Insert a separate page.)
Now read the following data from the graph:
| Learning Outcomes (LUs) |
| LO 1 |
| the economic cycleThe learner will be able to demonstrate knowledge and understanding of the economic cycle within the context of “the economic problem.” |
| Assessment Standards(ASs) |
| We know this when the learner: |
| 1.5 explains the different flows of money, factors of production, goods and services in the economic cycle within the South African economy; |
| 1.6 discusses the role of the foreign sector in the economic cycle; |
| 1.7 illustrates by means of a graph and discusses how demand and supply influence prices; |
| 1.8 critically assesses the influence and actions (strikes and stayaways) of trade unions in general and during the apartheid era on: |
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| 1.9 discusses the effect of the national budget on the economy (e.g. taxation and expenditure on education, social welfare, health and security.) |
ACTIVITY 1: Supply curve
Draw the graph according to the information supplied in the table.
ACTIVITY 2: Supply
Factors that will affect the amount that is supplied
Cost of production – the greater the cost, the longer it takes to establish a supply.
Price of products – the higher the price, the greater the quantity offered.
Production techniques – better techniques at lower prices can increase the quantity offered.
Competition – when there is little competition, the producer will limit the supply in order to increase the price.
Market conditions – if there are more sellers than buyers, the producer will lower prices in order to sell the supply.
Tax levies – increase the price, which decreases the demand, as well as the supply.
Climatic conditions – if the rainfall is insufficient, production will decrease, which will also lower the supply.
ACTIVITY 3: Demand curve
Draw the graph according to the information supplied in the table.
Factors that will affect the quantity that is demanded
Price – if prices increase, the demand will probably decrease.
Tastes and custom – changes can result in price fluctuations.
Change in income – if incomes increase, the demand may increase.
Substitution goods – a cheaper substitute will cause a decrease in the demand.
Tax – the price increases, which lowers the demand for the product.
Economic conditions – in times of prosperity, the demand, especially for luxury goods, will increase.
ACTIVITY 4: Supply and demand curve
Draw the supply and demand curve from the above data and provide the answers to the following:
The market equilibrium price: 60c
The demand and supply amount: 300 heads of cauliflower
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Last edited by Siyavula Uploaders on Apr 7, 2009 5:06 pm -0500.