CAIE A-Level Business AS 3.1.2 Demand and Supply Questions
Practise explaining demand and supply and the factors that influence products in a market.
- Syllabus
- 2026–2028
- Course
- Business 9609
- Level
- AS
Practise explaining demand and supply and the factors that influence products in a market.
Fizzy Drinks (FD)
FD is a private sector business that manufactures an international brand of carbonated drinks. Its slogan was 'A premium drink for premium customers'. The market for FD's drinks is very competitive, with 7 national and 12 international brands all competing in the same market. Recently FD lost the title of market leader to TR, one of its largest competitors. TR is a multinational public limited company.
Table 2.1 FD financial data 2023
Employee morale has dropped as a result of the negative feedback. Key employees have left to work for FD's competitors. The lack of experienced employees has led to a drop in the productivity of the production process.
Explain the term demand.
Explain the term demand.
AO2 Application 2 marks
2 marks
Developed application of one relevant point to a business context.
Limited application of one relevant point to a business context.
Indicative content Responses may include:
AO1 Knowledge and understanding
- A consumer's desire to buy
- Willingness to pay a specific price
- Popularity of a product amongst customers
- The quantity/number of customers looking to buy goods and services at a specific price
- Demand varies with price - the relationship varies depending on the type of good, e.g. normal or inferior
- Demand is at a specific point in time
2(a)(ii)
AO2 Application
Explanation of demand
- APP can be awarded for a second AO1 point
- Factors affecting demand
- High brand awareness and customer loyalty which increases/maintains demand
- Affected by costs and inputs e.g. reducing the quality of ingredients/raising the selling price/reducing the marketing budget reduces demand
- Consumer incomes
- Price of substitute goods and complementary goods
- Population size and structure
- Fashion and taste
- Quality of the product
- Advertising and promotion changes
Application to a business context
- Demand for the drinks has changed since altering ingredients
- People buy more drinks when the weather is warmer
- FD's products taste similar to competitors after the change in ingredients
- Cost of raw materials increased
Application can be made to FD or any other scenario/context/business/person.
Allow application to demand.
Accept all valid responses.
Guidance in awarding marks
Knowledge & understanding & Knowledge of demand & 1 mark
Explanation & Explanation of demand & 1 mark
Context &
Applied to a business context / business
environment
1 mark
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