1.2.2, 1.2.4 - supply and demand

Question 1

Definition of supply

Answer 1

Producers are willing and able to sell it

Question 2

If price of retail decreases?

Answer 2

Willingness to produce products will decrease as producers make less profit

Question 3

Higher prices

Answer 3

quantity supplied increases as producers can make more profit selling their goods and serivices at a higher price

Question 4

what is one assumption we make of firms

Answer 4

that they are profit maxamisers

Question 5

what makes the supply curve shift

Answer 5

Non - price factors
e.g
- Price of capital used to produce good or serivice
- Technology
- Weather
- costs
- Number of suppliers
- Productivity

Question 6

Utility

Answer 6

The benefit gained from the consumption of a good or service

Question 7

Rational consumer

Answer 7

The assumption that consumers make choices to maxamise utility

Question 8

Marginal utility

Answer 8

The additional benefit gained from consuming an extra unit

Question 9

Law of demand

Answer 9

There is an inverse relationship between price and quantity demanded, as price increases Qd decreases assuming cetris paribus

Question 10

what factors cause a shift in the demand curve

Answer 10

• Population
• Advertising
• Substitute price
• Income
• Fashion/taste
• Interest rates
• Complements price