> ## Content Index > Fetch the complete content index at: https://www.a-level-economics-tutor.com/llms.txt > Use this file to discover other available public pages before exploring further. # Causes of a Price Change | A-Level Economics Model Paragraph - URL: https://www.a-level-economics-tutor.com/causes-price-change-model-paragraph/ - Published: 2026-04-05T20:07:26.000Z - Updated: 2026-08-06T18:56:22.000Z - Author: Jaisul Naik - Tags: Model Paragraphs ### Increase in demand Related goods Population Income One factor that could cause an increase in the price of tea is an increase in the price of coffee. Demand is the number of goods and services that people are willing and able to buy at each given price. If demand for tea increases, then the price of tea would also increase. One factor that can cause demand for tea to shift to the right is if the price of coffee increases. Tea and coffee are substitute goods, which means they have a positive cross elasticity of demand (XED). If the price of coffee increases, many consumers would consider switching to tea, as they see it as a close substitute. This means there is an increase in the quantity of tea that people are now willing and able to buy at each price. The diagram below shows a rightward shift in demand. This leads to an extension in supply and an increase in the price of tea from P1 to P2. One cause of a price change is an increase in demand. For example, if there's an increase in the population, then there would be an increase in the number of people who are willing and able to buy a good or service at each price point. As a result, the demand curve would increase (shift to the right). As demand increases, there is an expansion along the supply curve. This leads to a new equilibrium quantity at Q2 and P2. One cause of a price change is an increase in demand. For example, if there's an increase in incomes, then people are more willing and able to buy a good or service at each price point. As a result, the demand curve would increase (shift to the right). As demand increases, there is an expansion along the supply curve. This leads to a new equilibrium quantity at Q2 and P2. ### Increase in supply Changes in technology One cause of a price change is an increase in supply. For example, if there's a change in technology that reduces the costs of production, then firms are more willing and able to supply the good or service at each price point. As a result, the supply curve would increase (shift to the right). As supply increases, there is an expansion along the demand curve. This leads to a new equilibrium quantity at Q2 and P2. ### Decrease in demand Population Income One cause of a price change is a decrease in demand. For example, if there's a decrease in the population, then there would be a decrease in the number of people who are willing and able to buy a good or service at each price point. As a result, the demand curve would decrease (shift to the left). As demand decreases, there is a contraction along the supply curve. This leads to a new equilibrium quantity at Q2 and P2. One cause of a price change is a decrease in demand. For example, if there's a decrease in incomes, then people are less willing and able to buy a good or service at each price point. As a result, the demand curve would decrease (shift to the left). As demand decreases, there is a contraction along the supply curve. This leads to a new equilibrium quantity at Q2 and P2. ### Decrease in supply Costs of production (energy) Productivity One cause of a price change is a decrease in supply. For example, if there's an increase in the costs of production, such as rising energy bills, then firms are less willing and able to supply the good or service at each price point. As a result, the supply curve would decrease (shift to the left). As supply decreases, there is a contraction along the demand curve. This leads to a new equilibrium quantity at Q2 and P2. The price of tea could also increase due to a leftward shift in the supply curve for tea. Supply is the quantity of goods and services that firms are willing and able to sell at each price. Supply could decrease due to a decrease in productivity. Productivity can be measured as output per worker per hour. If workers are slower, or they are working with older machinery, then output per worker falls, which raises the cost of producing each unit. As a result, firms are less willing and able to supply the good at each price point, so supply would shift to the left. This is because there would be a decrease in the quantity of tea that firms are willing and able to produce at each given price. This leftward shift in supply would cause a contraction in demand and an increase in the equilibrium price of tea from P1 to P2. --- ### A-Level Economics Tutoring I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. 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