Syllabus: Pearson - A Level Business
Module: 1.2 Market
Lesson: 1.2.2 Supply
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Introduction
This section of the Pearson Edexcel A Level Business syllabus, 1.2.2 Supply, falls under Theme 1: Marketing and People. It explores how businesses respond to changes in supply and how supply is affected by various external and internal influences.
Supply may not sound particularly riveting at first glance, but once you dig in, it’s clear how essential it is for learners to grasp. Without understanding supply, it’s impossible to make sense of how markets operate, how prices are set, or why shortages and surpluses occur. It links tightly to demand (obviously) and sets the foundation for topics such as elasticity, revenue, and strategic decision-making later in the course.
Whether you’re prepping students for exams or helping them understand the mechanisms behind a supermarket shelf going empty overnight, this topic is one to get right.
Key Concepts
Here’s what learners need to understand for 1.2.2 Supply:
Definition of Supply: The quantity of a good or service that producers are willing and able to sell at a given price, over a given time period.
Law of Supply: As the price rises, the quantity supplied generally increases, all else being equal (ceteris paribus). The reverse is also true.
Supply Curve: Typically upward-sloping, representing the direct relationship between price and quantity supplied.
Movement Along vs. Shifts of the Supply Curve:
A movement along the supply curve happens due to a price change.
A shift in the supply curve occurs when a non-price factor changes (e.g., technology, costs, regulation).
Determinants of Supply:
Changes in costs of production (e.g., wages, raw materials)
Introduction of new technology
Indirect taxes and subsidies
External shocks (e.g., natural disasters, war)
Government regulation
Joint Supply and Competitive Supply: Cases where producing one product affects the supply of another.
These underpin the broader economic narrative that students will continue to encounter throughout the A Level course.
Real-World Relevance
You only need to glance at the news to bring this topic to life. Take the global semiconductor shortage. A lack of supply due to factory closures and logistical delays pushed up the price of everything from cars to laptops. Or consider how rising energy costs (a non-price determinant) have squeezed profit margins and cut supply across manufacturing sectors.
Another example? Farmers and Brexit. New immigration rules impacted labour availability, reducing supply in agriculture. The response? Rising wages, mechanisation, and in some cases, reduced output altogether.
Use these examples to show students that supply isn’t a dusty theory, it’s playing out in real time, every day.
How It’s Assessed
Pearson Edexcel has a fairly consistent style when assessing this content. Here’s what to watch for:
Multiple-choice questions (MCQs) testing definitions or identifying shifts versus movements.
Short-answer questions asking students to explain causes of supply changes or sketch a supply curve.
Data response questions that bring in real-world scenarios, requiring interpretation of supply impacts (e.g., impact of a tax on supply).
Extended open-response questions (8 to 12 marks) that often pair supply with demand or focus on market outcomes (e.g., surplus, shortage).
Command words to prepare for: Explain, Analyse, Assess, Evaluate. For the longer responses, students should demonstrate clear application of supply concepts and be able to weigh up multiple influences using case-based evidence.
Enterprise Skills Integration
This topic is fertile ground for developing transferable business skills:
Decision-making: How would a business react to rising input costs? Would it change suppliers, adjust pricing, or innovate?
Problem-solving: If a company faces a supply chain disruption, how does it maintain output? Bring in examples like Just-in-Time vs. Just-in-Case inventory strategies.
Numeracy and graphical literacy: Reading and drawing supply curves is not just about lines on a page, it’s about interpreting the consequences for revenue, pricing, and profit.
Communication: Encouraging students to explain supply shifts in clear business terms builds both confidence and commercial fluency.
Simulations or business games can work well here. Have students take on roles in a supply chain hit by a shock (like a pandemic or tech failure) and ask them to negotiate or re-plan supply decisions.
Careers Links
Understanding supply lays groundwork for a range of career paths, particularly those linked to Gatsby Benchmarks 2 and 4 (Linking curriculum learning to careers and encounters with employers).
Some relevant roles:
Supply Chain Manager: Optimising stock levels, costs, and routes.
Economist or Policy Analyst: Studying supply-side influences on inflation and trade.
Procurement Officer: Negotiating supply contracts in the public or private sector.
Retail Buyer: Anticipating seasonal shifts in supply and demand to maintain stock.
Connect students with guest speakers, virtual tours of logistics hubs, or real procurement decision-making scenarios to bring it to life.
Teaching Notes
Here are a few tips to keep your teaching sharp:
Anchor the theory in examples: Always, always tie supply to something tangible – whether it’s iPhones, avocados, or petrol.
Watch out for confusion between supply and quantity supplied: This crops up a lot, especially when students mislabel diagram shifts.
Push for diagram accuracy: A labelled, well-constructed supply curve should be second nature. Drill it early.
Encourage critical thinking: Don’t just settle for “supply fell because costs rose.” Ask, “Which costs? Why now? Could it be mitigated?”
Use simple economic simulations: Create mini-market trading games with fluctuating supply inputs to show how changes impact prices and behaviour.
For extension, consider linking this topic to 1.2.3 (Markets and Equilibrium) so students see the full picture of supply and demand working together.
