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Theme 1 Edexcel business > 1.2 the market > Flashcards

1.2 the market Flashcards

1
Q

What are non-price factors that affect demand?

A

-Changes in tastes
-External shocks
-Advertising
-Changes to incomes
-Price of other goods

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2
Q

What may happen to Fords demand if VW increases prices?

A

The demand for ford cars may rise

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3
Q

What happens to the demand for luxury or branded good when incomes increase?

A

Demand rises, demand curve shifts to the right

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4
Q

What happens to a product’s demand if they advertise their product?

A

The demand for their product increases and the demand curve shifts the right

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5
Q

What is supply?

A

The number of goods businesses are willing to sell at a given price

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6
Q

What are non-price factors affecting supply?

A

-New technology
-Changes in cost of production
-External shocks

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7
Q

What happens to supply if there is an increase in the cost of production?

A

Supply will decrease and supply curve shifts to the left

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8
Q

What is market equilibrium?

A

The point where supply meets demand

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9
Q

What is the formula for PED?

A

% change in demand/%change in price

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10
Q

what type of good is one with a PED between 0 and 1?

A

Inelastic

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11
Q

What type of products are inelastic?

A

Necessities
Addictive products

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12
Q

What type of product is a product with a PED high of 1?

A

Elastic

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13
Q

What type of products are elastic ones?

A

-Luxury products and branded

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14
Q

What are factors affecting PED?

A

-Brand loyalty
-Availability of substitutes
-Type of product

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15
Q

How can businesses use PED?

A

They can determine a pricing strategy that will maximise revenue
eg, Lower prices of inelastic goods will lead to lower revenues

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16
Q

What is the formula for YED?

A

%change in demand/%change in income

17
Q

What type of product is one that has a YED of bigger than 1?

A

Luxury

18
Q

What happens to demand for luxury products when incomes rise?

A

Demand increases

19
Q

What type of product is one with a YED of between 0 and 1?

A

Necessity

20
Q

What type of product is one with a YED of smaller than 0?

A

Inferior

21
Q

What happens to demand to necessity goods when income increases?

A

Demand doesn’t really change as it is not very responsive to change in income

22
Q

What does a business use YED for?

A

-They can plan how much to produce

Theme 1 Edexcel business (2 decks)

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