7 Demand & Supply Curve Flashcards
Resource allocation
Making the most of resources
PPC Production Possibility Curve
The simplest representation of an economy’s output given its current resources and state of technology. It can also be called production possibility frontier.
Price Mechanism
The means of allocating resources in a market economy. It sends a signal from consumers to producers. It is self regulating as it does not require government intervention to work well.
Consumers
Individuals/households that purchase goods and services for their own use/for others.
Market
Place where consumers and producers meet to trade. It is related with demand and supply.
Demand
Quantity of products consumers are willing to buy at different prices per period of time.
Supply
Quantity of products producers are willing to supply at different prices over a period of time.
Notional Demand
When buyers may want to buy a product but is not always backed up by the ability to pay.
Effective Demand
Demand that is supported by the ability to pay.
If there is an inverse/negative relationship between price and quantity demanded
When price of the product increases demand decreases & vice versa
Factors that affect demand
Income
price and availability of related products
Fashion, taste, attitude
Normal goods
When quantity demanded increases as income increases.
Inferior goods
When quantity demanded decreases as income decreases
Substitutes
An alternative good that satisfy the same want or need
Complement
A good consumed with another good
