1.3 Introducing the market Flashcards
Define demand
Quantity of a good people are willing and able to buy at a given price at a given time
What is the main objective driving consumers’ decisions?
Assuming consumers are rational, they will aim to maximise their satisfaction by weighing the opportunity cost and trade-off one decision to another
What causes a shift in or movement along the demand curve
Non-price factors cause shifts in demand
Movements along the demand curve are caused by changes in price
Factors which cause a shift in demand
PIRATES
- Population:
- Income changes
- Related goods: Substitutes and compliments
- Advertisements: Marketing
- Trends and tastes
- Expectations: Uncertainty, predictions
- Seasons
Define supply
Amount of a good or service that producers are willing and able to provide at a given price, at a given time
What is market supply
Total output of all suppliers in a market
What is the link between price and quantity?
As quantity demanded increases price increases. As the quantity supplied increases, prices fall. Firms always aim to profit maximise.
What causes a shift in or along the supply curve?
Shifts are caused by non-price factors
Shifts along supply curve are caused by changes in price
Name 6 factors which cause a shift in supply
Costs of production, introduction of new technology (marginal cost), indirect taxes, subsidies, market saturation, external shocks
What is the equilibrium point
What is the equilibrium price
Define excess demand
Define excess supply
Draw the diagram for excess demand
Draw the diagram for excess supply
Name 4 limitations of the demand and supply model
Explain how the price mechanism works
What is consumer sovereignty
How to firm respond to a change in demand
What is a niche market
What is a mass market
Describe market growth
Name 4 factors that effect market growth
Define market research
State 3 impacts of market research on a firm
Define primary research
What are the pros and cons of primary research
Define qualitative and quantitative research
What is the main limitations of market research
What is market segmentation
What are 3 advantages of market segmentation
What are 3 disadvantages of market segmentation
What is market positioning and what are its benefits
What is market mapping
What are the advantages of market mapping
What are the disadvantages of market mapping
What does it mean when a business has a competitive advantage
What is the process of adding value and what are 2 ways to add value
Define USP
Define product differentiation
How does a business decide on a price for its products
Name 3 factors which affect output and price
What are the main features of a dynamic market
What are the main features of a stable market
Describe the process of market orientation
Define working capital
What is a market
What are buyers and sellers in a market?
What is the main objective driving consumers’ decisions?
What causes a shift in or movement along the demand curve
Factors which cause a shift in demand
What is the main objective driving consumers’ decisions
What causes a shift in or movement along the demand curve
What is a market?
A medium where buyers and sellers interact and agree to trade at a price
