1.2 Flashcards
What is demand?
Price consumers are able and willing to pay for.
What is supply?
Price producers are willing and able to supply to
What is equilibrium price
When supply meets demand
When does a surplus occur?
When supply exceeds demand
What is a shortage
When supply exceeds demand
What does substitutes effect demand
If the price of Oreo increased the price of neo would decrease
How do complementary products affect demand?
If price of printers increased the demand for inks would decrease.
How do consumer income affect demand?
Higher income can lead to increased demand in expensive goods
Fall in income can lead to decrease in expensive goods and rise in inferior goods
How can fashion , consumer tastes and preferences affect demand?
Warnings about dangers of eating too much sugar can lead to a decrease in demand for sugary drinks.
Fashion - trends are constantly changing
How does ads and branding help increase demand?
Push for brand loyalty so they can repeatedly buy products even if there is a cheaper substitute they need to keep buying from firm .
How can change in demographics ( population )affect demand? + healthcare
Changes in population can lead to changes to demand
E.g advances in health care lead to an increase in life expectations
Can lead to a rise in demand and services for older things in the older generation.
What can seasonal changes cause change in demand?
Cold winter = high demand for
Fans increase in demand in winter
How do external shocks lead to an increase in demand (Wars and floods)
War,disease and extreme weather. For example a risk of flooding may lead to an increase in demand for sandbags to protect their homes
