1.2 Price Determination for Goods and Services Flashcards
1
Q
1 Determinants of Demand for Goods and Services
A
- Market Demand
- Law of Demand
- Conditions of Demand
- Normal Goods
- Inferior Goods
2
Q
- Elasticities of Demand
A
- PED
- Factors Determining PED
- YED
- Different Normal Goods
- XED
- Complementary Goods
- Substitute
3
Q
- Determinants of Demand
A
- Market Supply
- Law of Supply
- Ceterus Paribus
- Conditions of Supply
4
Q
- Price Elasticity of Supply
A
- PES
2. Factors Determining PES
5
Q
- Determination of Equilibrium Market Price
A
- Market Equilibrium
2. Market Disequilibrium
6
Q
- Interrelationship Between Markets
A
- Joint Supply
- Competing Supply
- Complementary Good
- Substitute Good
- Composite Demand
- Derived Demand
7
Q
1.1 Market Demand
A
- Quantity of goods / services that the consumers are willing to buy at different prices
8
Q
1.2 Law of Demand
A
- As a good’s price falls, more is demanded
9
Q
1.3 Conditions of Demand
A
- Price of SUBSTITUTE goods
- Price of goods in JOINT demand
- INCOME
- TASTES
- POPULATION size
10
Q
1.4 Normal Goods
A
- Good that’s demand increases as income rises
11
Q
1.5 Inferior Goods
A
- Good that’s demand decreases as income rises
12
Q
2.1 PED
A
- % Change in Q Demanded / % Change in P
13
Q
2.2 Factors Determining PED
A
- Substitutability
- Time
- Percentage of Income
- Necessities
14
Q
2.3 YED
A
% Change in Q Demanded / % Change in Income
15
Q
2.4 Superior Goods
A
- YED is greater than +1
16
Q
2.5 Basic Goods
A
- YED between 0 and +1
17
Q
2.6 XED
A
% Change in Q of ‘Good A’ Demanded / % Change in P of ‘Good B’
18
Q
2.7 Complementary Goods
A
- Joint Demand
19
Q
2.7 Substitute
A
- Competing Demand
20
Q
3.1 Market Supply
A
- Quantity of a Good / Service that all firms plan to sell.
21
Q
3.2 Ceterus Paribus
A
- All things Remaining Constant
22
Q
3.3 Conditions of Supply
A
- Cost of Production
- Technical Progress
- Taxes Imposed on Firms
- Subsidies Granted
23
Q
4.1 PES
A
% Change in Q Supplied / % Change in P
24
Q
4.2 Factors Determining PES
A
- Length of the Production Period
- Availability of Space Capacity
- Ease of Accumulating Stocks
- Ease of Switching Between Alternative Methods of Production
- Number of Firms in the Market
- Time
25
5.1 Market Equilibrium
- Occurs where the D curve and the S curve intersect
26
5.2 Market Disequilibrium
- Any position other than equilibrium
27
6.1 Joint Supply
- When one good is produced, another is produced
| - E.g. beef and leather
28
6.2 Competing Supply
- Production of one good competes with production of another.
- E.g. Milk and Cheese
29
6.3 Complementary Goods
- Demanded at same time as another good
30
6.4 Substitute Goods
- a good in competing demand
31
6.5 Composite Demand
- Demand for good with more than one use
32
6.6 Derived Demand
- Demand for a good which is an input into the production of another good
