1.2 Flashcards
Complementary goods
Products consumed/used together, so they are purchased together E.g. printer and printer ink
Consumer income
The money earned/received from work/investments
Demand
The quantity of goods/services that a consumer is willing to buy at a given price and at a given time
Demographics
The structure of the population such as age, gender and geographical distribution
External shocks
Factors beyond the control of a business
Seasonality
When demand rises or falls at particular times of the year according to seasonal factors
Substitutes
Goods that can be bought as an alternative to others, but perform the same function E.g. petrol car and electric car
Government subsidies
A payment given to producers, usually to encourage production of a certain good
Indirect taxes
Taxes imposed by the government on spending e.g. VAT and
Excise duties. Responsibility for payment lies with the
business.
Supply
The amount that producers are willing and able to produce at a given price
Equilibrium price
The price where supply and demand are equal. Also known as market clearing price
Non price factors
Factors other than price e.g. Change in consumer incomes, advertising and seasonality
Shortage in markets
Where demand exceeds supply
Surplus in markets
Where supply exceeds demand
Luxury
Goods that consumers like to buy if they can afford them e.g. air travel and fashion items
Necessity
Basic goods that consumers need to buy e.g. food, electricity and water
Price elastic
Quantity demand is responsive to a change in price
PED
Measures the responsiveness of quantity demanded to a
change in price
Price inelastic
Quantity demanded for the product is less responsive proportionately to a change in price
YED
Measures the responsiveness of changes in quantity demand to changes in consumer income
Inferior good
When incomes increase there is a decrease in quantity demanded e.g. budget goods
