Evaluating effects on different stakeholders means showing, for each group, what changes, why it changes and what the effect depends on. The groups can be affected in different directions, and a good answer shows that.
This lesson belongs to the economic reasoning and evaluation skills. It builds on writing cause, mechanism and effect explanations, and it pairs with stating assumptions and limitations without ideological conclusions.
What does one stakeholder paragraph contain?
Use four parts: the group, the effect, the reason and the condition. The reason is the economic link. The condition is what must hold for the effect to be as stated.
For example: “Buyers pay more per loaf, because the price rose. The effect is larger for buyers who do not switch to another shop.”
Worked example: a fictional bakery price rise
A fictional bakery raises the price of a loaf from RM3.00 to RM3.50. Daily sales fall from 400 to 360 loaves. The bakery buys flour from a supplier, and each loaf uses the same amount of flour.
Bakery revenue. Before: 3.00 × 400 = RM1 200. After: 3.50 × 360 = RM1 260. Revenue rose by RM60, or 5%.
Price and quantity change. Price rose by 0.50 ÷ 3.00 × 100 = 16.7%. Quantity fell by 40 ÷ 400 × 100 = 10%. Quantity fell by less than price rose, which is why revenue rose.
| Stakeholder | Effect | Reason | Condition |
|---|---|---|---|
| Buyers who stay | Pay RM0.50 more per loaf | Higher price | They have no cheaper alternative they prefer |
| Buyers who leave | Buy 40 fewer loaves a day in total | Quantity demanded falls | They can switch to substitutes |
| The bakery | Revenue rises by RM60 a day | Price rose by a larger percentage than quantity fell | Profit also depends on costs, which fall a little with 40 fewer loaves |
| The flour supplier | Sells 10% less flour to the bakery | Fewer loaves baked | Each loaf uses the same flour |
The bakery gains revenue, while buyers and the supplier are worse off in different ways. No group wins on every measure.
Weighing without declaring a winner
If the question asks for a judgement, write a sentence that states the basis: “If the aim is the bakery’s revenue, the change helps; if the aim is buyers’ spending, it does not.”
The sentence shows the judgement depends on what is valued. The figures cannot choose the value for you.
The mistake that costs marks
The usual slip is a one-sided paragraph: “The price rise is good because the bakery earns more.” It covers one group and stops.
The other common slip is to write “buyers lose and the bakery wins” with no conditions. The contrast below shows the improvement.
| Step | Wrong | Right |
|---|---|---|
| Groups covered | One | Buyers, bakery and supplier |
| Reason | None | Price up 16.7%, quantity down 10% |
| Condition | None | Depends on substitutes and on costs |
Check yourself
A fictional ice-cream stall raises its price from RM4 to RM5. Daily sales fall from 200 to 180 cups. Find the change in revenue. Then write one effect, reason and condition for each of: customers, the stall owner and the cup supplier.
Answer
Revenue before: 4 × 200 = RM800. After: 5 × 180 = RM900. Revenue rose by RM100, which is 12.5%.
Customers: pay RM1 more per cup, because the price rose. The effect is greater for those with no cheaper treat they like as much.
Owner: revenue rises by RM100 because price rose 25% and quantity fell 10%. Profit also depends on costs, which fall slightly with 20 fewer cups.
Cup supplier: sells 10% fewer cups to the stall. This holds if each sale uses one cup.
What to study next
Next, see how the reasoning is supported with data in evidence-based economic answers. You can also check the price-and-quantity logic with the supply-demand diagram reasoning explorer.
If a teacher checking your condition wording would help, see online one-to-one Economics tuition.