14- demand and supply and market forces Flashcards
1
Q
What are the determinants of supply?
A
Price
Competitors price
Tax
External shock
2
Q
What are the determinants of demand?
A
Demographic change
Wealth/ income
Price
Advertising/ promotion
3
Q
What is elasticity of demand?
A
how responsive demand is to change in price
4
Q
What is the different between an elastic graph and an inelastic graph?
A
inelastic = steeper
5
Q
How do you calculate elasticity of demand?
A
% change in demand / % change in price
6
Q
What is the equilibrium point?
A
The price consumers demand concides with what the business is prepared to supply
7
Q
What is effective demand?
A
The quantity that people in a market will and can purchase at each price
e.g. if the market price is low the demand will be higher
