analysis of demand Flashcards
where buyers and supplier, sellers meet
market
value of goods and services usually expressed in monetary terms
price
very important as it helps in allocation of goods and services
price system
schedule of various quantities of commodities which buyers are willing and able to purchase at a given time
demand
quantity of goofs and services that people are ready to buy
demand
demand factors (5)
• income
• population
• tastes and preference
• price expectation
• price of related goods
people buy more when income increases
income
more people means more demand for goods and services
more consumers in urban than rural
population
demand for goods and services increases when people like or prefer them
taste and preferences
when people expect prices of goods to increase tomorrow, they buy more of these goods
price expectations
when the price of a certain product increases, people tend to buy a substitute product
price of related goods
consumers are most likely to buy more goods and services when price decreases, and buy less when price increases
law of demand
at lower prices, an individual has greater purchasing power
income effect
consumers tend to buy goods w/ lower prices
substitution effect
graphical representation showing the relationship between price and quantity demanded per period
demand curve
schedule of various quantities of commodities which producers are willing and able to produce at a given period
supply
supply determinants
technology
cost of production
number of sellers
price of other goods
techniques and methods of production
technology
uses modern technology increases supply of goods
technology
uses animals and people and very slow in producing goods
primitive technology
if the price of raw materials/salaries increase, it means higher cost of production
cost of production
more sellers or factories means an increase in supply
number of sellers
changes in the price of goods affect the supply of such goods
price of other goods
as price increases, quantity supply also increases
law of supply
graphical representation showing relationship between the price of the product of production and quantity supplied per period
supply curve
