2.1 Demand And Supply Curves Flashcards
What’s the definition of Notional Demand?
The desire for a product
What’s the definition of Effective Demand?
The willingness and ability to buy a good or service
What’s the definition for Demand?
The quantities of a product that consumers are willing and able to purchase at different prices.
What’s the definition of ceteris paribus?
The assumption that all else is kept constant.
What are the 7 factors affecting affecting demand?
Population
Advertising
Substitutes (Price Of)
Income
Fashion and Tastes
Intrest Rates
Complements Price
What’s the definition of supply?
The quantity that producers are willing and able to supply at different prices.
What are the 6 factors affecting supply?
Cost of production
Subsides
Weather Conditions
Indirect Tax
Firms (Number of)
Technology (Productivity)
What’s the difference between an individuals demand and market demand?
Individual demand is the quantity demanded by a single consumer, while market demand is the sum of all individuals’ demand.
How is individual supply different from market supply?
Individual supply is the quantity supplied by one firm, while market supply is the sum of all firms’ supply.
How does an increase in consumers’ income affect demand for a normal good?
Demand increases, shifting the demand curve right.
How does an increase in income affect demand for an inferior good?
Demand decreases, shifting the demand curve left.
How does the price of a substitute affect demand?
If the price of a substitute rises, demand for the original good increases.
How does the price of a complement affect demand?
If the price of a complement rises, demand for the original good decreases.
How does an increase in the cost of production affect supply?
It reduces supply, shifting the supply curve left.
What impact does technological improvement have on supply?
It increases supply, shifting the supply curve right.
How do government subsidies affect supply?
Subsidies reduce production costs, shifting supply right.
What is the effect of a natural disaster on supply?
It reduces supply, shifting the supply curve left.
Does a change in price shift the demand curve/supply curve?
No, it only causes movement along the curve.
What causes a contraction in the demand curve?
An upwards movement along the curve
What causes a extension in the demand curve?
An downwards movement along the curve
What causes a contraction in the supply curve?
An downwards movement along the curve
What causes a extension in the supply curve?
An upwards movement along the curve
