1.2.1, 1.2.2 And 1.2.3 Demand, Supply And Markets Flashcards
What are factors leading to a change in demand
- price of substitutes
- price of complements
- change in consumer incomes
- social trends
- advertising and branding
- demographic
- external shocks
What is the age distribution and how does it affect demand ?
The age distribution of population is the number of people that fall into different age groups. This will have an effect on the demand patterns. For example as the population ages increases There will be more demand for goods such as retirement homes specialist holidays for the elderly and healthcare
How does geographical distribution affect demand?
Geographical distribution can also affect the mind. Increase lead in the most developed and developing countries more and more people live in urban areas. As a result the demand of schools and hospitals in these areas will increase.
What external shocks affects demand
- competition - If a strong new competitor enters the market, for the first time, demand is likely to fall for the original firms products.
- government - A government can influence demand in a number of ways. Rising taxes, for instance could dampen demand for many products because spending power would be curbed.
- economic climate - If the economy is growing demand for most goods and services will tend to rise
- social trends and seasonality
Complementarity goods
Goods that are purchased together because they are consumed together
Demand
The quantity of a product bought at a given price over a given period of time.
Demand curve
A line drawn on a graph that shows how much of a good will be bought at different prices.
Inferior goods
Good for which demand will fall if income rises, or fall if income falls
Normal goods
Goods for which the demand will rise if income rises or fall If income falls
Substitute goods
Goods that can be bought as an alternative to others, but perform the same function
Factors leading to a change in supply
- changes in the cost of production
- introduction of new technologies
- indirect taxes - when taxes increases supply decreases and vise versa
- government subsidies
- external shocks
What external shocks affect supply
- world events e.g war
- weather
- government
-price of related goods - if you are making potatoes and see that the price in other vegetables are rising you would decrease your supply of potatoes and increase supply of other foods because it is making you more money
Subsidy
A grant given to producers usually to encourage production of a certain good
Supply
The amount of a product that supplies make available to the market at any given price in a given period of time
Supply curve
A line drawn on a graph that shows how much of a good sellers are willing to supply as different prices.
