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Using the data in Extract A, draw a supply and demand diagram to show the possible impact of the change in the price of gold, between 6 December 2019 and 5 January 2020, on the luxury watch market. - Edexcel - A-Level Business - Question 1 - 2022 - Paper 1
Question 1
Using the data in Extract A, draw a supply and demand diagram to show the possible impact of the change in the price of gold, between 6 December 2019 and 5 January 2... show full transcript
Worked Solution & Example Answer:Using the data in Extract A, draw a supply and demand diagram to show the possible impact of the change in the price of gold, between 6 December 2019 and 5 January 2020, on the luxury watch market. - Edexcel - A-Level Business - Question 1 - 2022 - Paper 1
Step 1
Constructing the Supply and Demand Diagram
Answer
To show the impact of the change in gold prices on the luxury watch market, start by drawing the initial supply (S) and demand (D) curves on a graph where the vertical axis represents Price and the horizontal axis represents Quantity. Label the initial equilibrium point as P1 at the intersection of the initial supply and demand curves at Q1.
Step 2
Step 3
New Equilibrium
Answer
On the graph, identify the new equilibrium point where the new supply curve (S1) intersects with the original demand curve (D) to denote a higher price (P) and a lower quantity (Q). This visual representation reflects how increased gold prices could affect the luxury watch market, resulting in higher prices and reduced quantity available in the market.