1. The Market System :Unit 3 -7

Question 1

1. What is the demand curve?

Answer 1

line drawn on a graph that shows how much of a good will be bought at different prices.

Question 2

2. What is demand?

Answer 2

demand is the willingness and ability of a person to buy a good at a given price over a given period of time supported by the ability to pay.

Question 3

3. What is the relationship between price and demand?

Answer 3

• inverse relationship.

Question 4

4. What is disposable income?

Answer 4

• income that is available to someone over a period of time spent: it includes state benefits but excludes direct taxes.

Question 5

5. What are the 6 factors that may shift the demand curve?

Answer 5

Fashion and tastes.
Price of substitutes.
Price of complementary.
Advertising.
Income.
Demographic changes.

Question 6

6. What are inferior goods?

Answer 6

goods for which demand will fall if income rises or rise if income falls.

Question 7

7. What are the normal goods?

Answer 7

goods for which demand will increase if income increases or fall if income falls.

Question 8

8. What are the substitute goods?

Answer 8

• goods bought as an alternative to another but perform the same function.

Question 9

9. What are complementary goods?

Answer 9

goods purchased together because they are consumed together.

Question 10

10. What is supply?

Answer 10

amount that producers are willing to offer for sale at different prices in a given period of time.

Question 11

11. What is the relationship between supply and price?

Answer 11

• Proportionate relationship

Question 12

12. What are the 5 factors that may shift supply curve?

Answer 12

• Production costs.
• Indirect taxes.
  -Natural factors.
  -Technology advances.
  -Subsidies.

Question 13

13. What is indirect taxes?

Answer 13

taxes levied on spending such as VAT.

Question 14

14. What is productivity?

Answer 14

• rate at which goods are produced and the
  the amount produced in relation to work, time and money needed to produce them

Question 15

15. What is consumption?

Answer 15

• amount of goods, services, energy, or natural materials used in a particular period of time.

Question 16

16. What is subsidy?

Answer 16

money that is paid by a government or organization to make prices lower, reduce the cost of producing goods, or provide a service, usually to encourage the production of a certain good.

Question 17

17. What is the equilibrium price?(market clearing price)

Answer 17

• price at which supply and demand are equal.

Question 18

18. What is total revenue?

Answer 18

• the amount of money generated from the sale of goods calculated by multiplying the price by quantity.

Question 19

19. What is excess demand?
20. What is excess supply?

Answer 19

• excess demand is where demand is greater than supply and there are shortages in the market.
• excess supply is where supply is greater than demand and there are unsold goods in the market.