1.2 The Market Flashcards
1
Q
What causes the supply curve to shift?
A
- future expectations
- external shocks
- technology
- wages
- taxes/subsidies
2
Q
What is price elastic demand?
A
Change in price leads to a more than proportional change in quantity demanded
3
Q
What is price inelastic demand?
A
Change in price brings about a less than proportional change in quantity demanded
4
Q
What are the factors affecting ped?
A
- substitutes available
- proportion of income
- time taken
- nature of good (luxury/necessity)
5
Q
What are some shift factors for ped?
A
- Changes in income
- consumer confidence
- preferences
- population changes
- interest rates
- subs/ complement
- quality changes
6
Q
What is yed ?
A
Measures the responsiveness of demand to a change in income
7
Q
What is income elastic?
A
Above 1 or less than -1
8
Q
What is income inelastic?
A
Between 1 and -1
9
Q
What is supply?
A
The amount producers are willing and able to sell at any given price point
10
Q
What factors lead to a change in supply?
A
- changes in the costs of production
- introduction of new technology
- indirect taxes
- government subsides
- external shocks
