2.2 and 2.3 Flashcards
What is demand
The amount of g/s consumers are willing and able to purchase at a given price at a a given point in time
What is the law of demand
That there is an inverse relationship between price and demand
Why is the demand curve downward sloping
Law of diminishing utility
Two reasons to explain reasons for movements along the D curve
Income effect
Substitute effect
Non price factors effecting demand
PASIFIC
Joint demand
Where g/s are bought together
Composite demand
Where g/s have more than one use
Eg milk- cheese+butter
Competitive demand
Substitute
what is supply
The amount of g/s producers are willing and able to produce at a given price at a given point in time
Law of supply
There is a direct relationship between price and supply
Why is the supply curve upward sloping
The profit motive
What is the profit motive
Firms will supply a higher amount when prices rise because of increased profits
Non price factors effecting supply
PINTSWC
Competetive supply
Alternate products a firm could make with its resources
