Structuring and Writing Demand and Supply Essays for A Level Exams

See the original Google doc provided to ETG students here

When tackling demand and supply questions in A Level exams, structuring your essay or case study response effectively is crucial for conveying your understanding clearly and earning top marks. Here's a step-by-step guide to help you craft well-structured answers.

Step 1: Identify the Events and Requirements

Begin by carefully reading the question to identify the key events and requirements. For instance, consider a question like:

"With the help of a diagram, use supply and demand analysis to explain the likely consequences for the world market for fish caught in the wild of both increased publicity given to the health benefits of eating fish and more effective action against illegal fishing."

Here, you need to identify:

• Event 1: Increased publicity given to the health benefits of eating fish.

• Event 2: More effective action against illegal fishing.

• Requirement: Discuss the impact on the world market for fish, focusing on price, output, and total expenditure.

Step 2: Link Events to Non-Price Factors of Demand and Supply

Next, link each event to relevant non-price factors affecting demand or supply. Here’s a quick reference list:

Non-Price Factors of Demand:

• Taste and preferences

• Income levels of consumers

• Price of related goods (substitutes/complements)

• Size of the market

• Expectations of future prices/incomes

Non-Price Factors of Supply:

• Price of related goods

• Taxes and subsidies

• Expectations of future prices

• Number of sellers

• Technology

• Supply shocks

For our example:

• Event 1 (Increased publicity on health benefits): Linked to tastes and preferences, causing an increase in demand.

• Event 2 (Action against illegal fishing): Linked to the number of sellers, causing a decrease in supply.

Step 3: Independent Event Analysis Using DEER Framework

Analyze each event independently using the DEER framework (Diagram, Explanation, Effect, Result).

Event 1 Analysis:

• Diagram: Draw a demand curve shifting rightward from DD0 to DD1.

• Explanation: Publicity around the health benefits of eating fish increases consumer demand.

• Effect: At the initial price P0, there is a shortage (QsQd), creating upward pressure on prices.

• Result: Prices rise to a new equilibrium at P1, where the quantity demanded equals quantity supplied.

Event 2 Analysis:

• Diagram: Draw a supply curve shifting leftward from SS0 to SS1.

• Explanation: More effective action against illegal fishing reduces the number of sellers.

• Effect: At the initial price P0, there is a surplus (QsQd), creating upward pressure on prices.

• Result: Prices rise to a new equilibrium at P1, where the quantity supplied equals quantity demanded.

Step 4: Summative Analysis

After analyzing each event independently, provide a summative analysis. Discuss the combined impact and justify the extent of the shifts.

Combined Analysis:

• Price Impact: Both an increase in demand and a decrease in supply lead to higher prices (P0 to P1).

• Output Impact: The impact on output can be ambiguous. Increased demand might increase output, while decreased supply might reduce it. Justify the dominant effect based on the context.

For example:

• If the increase in demand (due to health benefits) outweighs the decrease in supply (due to reduced illegal fishing), the net effect could be a marginal increase in output.

• Use economic theories like YED (Income Elasticity of Demand) to support your argument if the good is a luxury.

Conclusion

Summarize your findings, reinforcing the key points of your analysis. Highlight how you used diagrams and economic theories to support your arguments.

Example Conclusion: "In conclusion, the increased publicity of the health benefits of eating fish and more effective action against illegal fishing are likely to result in higher prices for wild-caught fish. While the net effect on output is less certain, the combined analysis suggests a potential marginal increase in output if the demand shift is more significant than the supply shift. This comprehensive approach, using supply and demand diagrams, ensures a robust understanding of market dynamics."

By following this structured approach, you can effectively tackle demand and supply questions, showcasing your analytical skills and understanding of economic concepts.