1.2- the market Flashcards
What is demand?
The amount of a good/service that consumers are willing and able to buy at a given price
Name 5 things that change demand
-Quality
-Price
-Celebrity endorsement
-Ethics
-Complimentary goods
What is a shock?
Something that is out of our control
Give 5 examples of shocks to demand
-Interest rates
-Unemployment
-Inflation
-Exchange rates
-Pandemic
What is supply?
The quantity of a good or service that a producer is willing and able to make available on the market at a given cost, over a given period of time
Give 5 examples of things that change the amount we supply
-Cost of production
-Availability of suppliers
-Seasonal changes
-Inflation
-Motivation of staff
Give 5 examples of things that increase production costs
-Lack of technology
-Inflation
-Wages legislations
-Outdated trends
-Lack of research
What does elasticity mean?
How much something changes
What is the definition of ‘price elasticity of demand (PED)’?
Changing price affects demand
What is the formula for PED?
Percentage change in quantity demanded/percentage change in price
What is an elastic good?
An answer greater than 1, where demand will considerably change with a price change
What is an inelastic good?
An answer less than 1, where demand is slightly responsive to a change in price
What is unitary elasticity?
An answer of 1
What is the formula for income elastcity of demand (YED)?
Percentage change in quantity demanded/percentage change in income
If there is an increase in a PED graph’s supply/demand, which way do you move the line?
Right
