2ND YEAR - Demand And Supply

Question 1

Market

Answer 1

A place where buyers and sellers interact and trade goods and services

Question 2

Final Market

Answer 2

Actual locations where goods are bought and sold e.g farmers market, supermarket

Question 3

Factor Market

Answer 3

Where factors of production are bought and sold e.g labour market and property market

Question 4

Commodities Market

Answer 4

Where raw materials used in production are bought and sold e.g oil, gold

Question 5

Global Market

Answer 5

e.g EBay

Question 6

National Market

Answer 6

e.g Done Deal

Question 7

Black Market

Answer 7

Where goods are sold illegally

Question 8

Demand

Answer 8

Is the quantity of a product that consumers are willing to buy at a given price

Question 9

Supply

Answer 9

Is the quantity of a product that producers are willing to sell at a given price

Question 10

Law of Demand

Answer 10

• If the price of a product RISES the quantity demanded FALLS
• If the price of a product FALLS the demand RISES

Question 11

Factors Affecting Demand

Answer 11

1. Price
2. Fashion
3. Season
4. Advertising
5. Expectations of Buyers
6. Income Levels
7. Price of Substitute Goods
8. Price of Complementary Goods

Question 12

Factors Affecting Demand - Price

Answer 12

Price goes up, demand falls

Price goes down, demand rises

Question 13

Factors Affecting Demand - Fashion

Answer 13

As consumer tastes change the demand for products will change e.g Furby were popular in 2001, but not anymore

Question 14

Factors Affecting Demand - Season

Answer 14

Demand for some products change depending on the time of year e.g ice cream in the summer

Question 15

Factors Affecting Demand - Advertising

Answer 15

Products heavily advertised may see an increase in demand

Question 16

Factors Affecting Demand - Expectations of Buyers

Answer 16

If customers expect price to rise in future, demand more now.

Expect price to fall in future, demand less now

Question 17

Factors Affecting Demand - Income Levels

Answer 17

If a person’s income increases they will demand more goods and services

Question 18

Factors Affecting Demand - Price of Substitute Goods

Answer 18

Some goods have close substitutes.

e.g if price of Coca Cola goes up, some consumers will switch to cheaper alternative Pepsi

Question 19

Factors Affecting Demand - Price of Complementary Goods

Answer 19

Some goods are used jointly e.g price of tennis balls rise, demand for tennis rackets falls

Question 20

Law of Supply

Answer 20

• If the price of a product rises the quantity supplied rises
• If the price of a product falls the quantity supplied falls

Question 21

Factors Affecting Supply

Answer 21

1. Price
2. Price of Related Goods
3. Production Costs
4. Technology
5. Environment

Question 22

Factors Affecting Supply - Price

Answer 22

When price goes up, goods are more profitable for producer. Supply will rise.

Price goes down, goods are less profitable. Supply will fall.

Question 23

Factors Affecting Supply - Price of Related Goods

Answer 23

Price of Substitute and Complementary Goods may cause consumers to switch from/stop buying the product. Supply will be affected.

Question 24

Factors Affecting Supply - Production Costs

Answer 24

Cost of making a product is low, more goods supplied

Question 25

Factors Affecting Supply - Technology

Answer 25

Improvements in technology make it easier for goods to be made. Supply increases.

Question 26

Factors Affecting Supply - Environment

Answer 26

Good/bad weather can affect crops. Bad weather might mean less, good weather might mean too much.

Question 27

Demand Curve

Answer 27

A graph that illustrates the expected demand for a product at different price levels.
(We have a picture in our hardbacks)

Question 28

Supply Curve

Answer 28

Graph that shows the quantity of a product that the seller will supply at different price levels
(Picture in hardback)

Question 29

Market Equilibrium

Answer 29

See hardback