Syllabus: Pearson - A Level Business
Module: 1.2 Market
Lesson: 1.2.3 Markets

Introduction

This article covers Pearson Edexcel A Level Business Topic 1.2.3 Markets, part of Theme 1: Marketing and People. It builds on the preceding units on demand (1.2.1) and supply (1.2.2) to explain how market interaction determines price and quantity via the price mechanism, leading to equilibrium or disequilibrium. It aligns to the Pearson specification by developing knowledge (AO1), application (AO2) and analysis (AO3) via diagrammatic skills and interpretation of market changes Pearson QualificationsSave My Exams+8Enterprise Skills Ltd+8Save My Exams+8Pearson Qualifications.

Key Concepts

• Market definition: any space physical or virtual where buyers and sellers trade at an agreed price; for example a shopping centre or e‑commerce platform Save My Exams+1Save My Exams+1.
• Price mechanism: interaction of demand and supply determines equilibrium price and quantity; sellers adjust production until equilibrium is reached Wikipedia+10Save My Exams+10Enterprise Skills Ltd+10.
• Equilibrium vs disequilibrium: excess demand leads to upward pressure on price, excess supply leads to downward pressure until balance is restored Enterprise Skills Ltd.
• Shifts in demand or supply: students should recognise shifts due to income, tastes, costs, external shocks or related goods and understand effects on market outcome pearson.com+10Physics and Maths Tutor+10Enterprise Skills Ltd+10.
• Graphical skills: ability to draw and interpret supply‑demand diagrams showing movements along curves and shifts.

Real‑World Relevance

In the UK rental housing market in cities like London an increase in overseas students or locals entering the market drives demand up, leading to higher equilibrium rents. Conversely a rise in new building supply may ease the market over time. In the energy sector, supply shocks such as gas price spikes push supply curves left, raising equilibrium prices—a dynamic seen during recent geopolitical events. Another mini case: the growth of the electric vehicle market started as a niche but is shifting into a mass market as demand increases and supply scales (EV market moving equilibrium) pearson.compearson.com.

How It’s Assessed

This content is examined in Paper 1 (Marketing and People), typically in Section A or B data‑response or short structured questions. Expect command words such as “explain”, “analyse” and “evaluate” in relation to market equilibrium or shifts. AO1 often requires definition and diagrams, AO2 requires application to contexts, AO3 requires analysis of effects of shifts or shocks. Diagrams are essential and may form part of AO2/AO3 marks.

Enterprise Skills Integration

Discussing market dynamics helps develop problem‑solving as students consider what actions firms might take during disequilibrium. Decision‑making skills are developed by weighing responses to shifting demand or supply curves. Analytical thinking is fostered through interpreting data and diagrams. Using real‑world stimuli encourages adaptability and commercial awareness.

Careers Links

Understanding markets supports Gatsby Benchmark 4 (linking curriculum to careers). Roles benefiting from this knowledge include market analysts, commodity traders, product managers, supply chain coordinators, economists and business consultants. It also supports progression into higher education in economics, finance, marketing or management.

Teaching Notes

Tip 1: Begin with concrete examples (e‑commerce platforms, local farmers’ markets) before introducing abstract demand/supply diagrams. Tip 2: Use mini case studies like EV rollout, housing rental markets or seasonal goods to show shifts. Highlight common pitfalls such as confusing movements along curves with shifts. Encourage learners to annotate diagrams: label curves, equilibrium points, shifts and axes. Extension activity: present learners with data showing a demand shift, ask them to predict resulting price and quantity and justify. Challenge higher‑ability students to evaluate policy interventions (e.g. price controls or taxes) in disequilibrium situations.