Ch 27- Demand and Supply

Question 1

Market demand

Answer 1

Refers to people’s willingness to buy a product or service at a particular place or time.

Question 2

Demand curve

Answer 2

A graph showing the quantity of a product demanded by customers at different prices

Question 3

What are movements in a demand curve caused by

Answer 3

Change in the price of a product
( causing quantity demand to change)

Question 4

What are shifts in a demand curve caused by

Answer 4

All other factors ( not price change)
Advertising, disposable income, government regulations, natural causes, population changes

Question 5

Factors affecting demand for a product?

Answer 5

Advertising and fashion trends

Disposable incomes and interest rates

Gvt taxes and regulations

Prices of substitute and complementary goods

Natural causes and population change

Question 6

Market supply

Answer 6

Refers to quantity of a product that sellers are willing to make available to buyers at a given price and time

Question 7

Supply curve

Answer 7

Graph showing quantity of a product sellers are willing to supply at different prices

Question 8

Factors influencing supply of gods and services

Answer 8

Price

Cost of production

Natural causes - weather

Govt regulation, taxes, grants, subsidies

Price of supplying alternative poduct

Question 9

How does price influence demand

Answer 9

When price increases demand falls and vice versa

Question 10

How does price of substitute goods affect demand

Answer 10

If price of sub goods increases, demand for a product will increase as it has become relatively cheaper for customers.

Question 11

Substitute goods

Answer 11

Can be swapped with each other for the sam euse

Question 12

How does price of complementary goods affect demand

Answer 12

Sharp increase in milk could lead to fall in demand for both milk and cereal

Question 13

Complementary goods

Answer 13

Products often purchased and used together

Question 14

How does advertising affect demand

Answer 14

Boosts demand

Question 15

Hiw does disposable income affect demand

Answer 15

Hiw much money people have to spend

Interest rates influence borrowing > houses and cards demand decreases in interest rates are low.

Question 16

How does government regulation affect demand

Answer 16

Eg increase in VAT will increase prices and discourage demand ( tax on plastic bags)

E.g govt grants for households to be in energy efficient causes rise in demand for solar panels

Question 17

How does natural causes affect demnad

Answer 17

Cold weather decreases demand for ice cream but increases for umbreallas

Population growth increases demand

Question 18

How does price if a product affect supply

Answer 18

The Higher the price, the greater profit for sellers therfore they will supply more

Question 19

How does cost of production affect supply

Answer 19

If cost of wages, raw materials, energy increase it becomes difficult to make a profit. > produce less supply

New technology can lower costs and increase supply

Question 20

How does natural causes affect supply

Answer 20

Bad weather or diseases can interrupt supply eg agricultural goods.

Question 21

How does government regulations and subsidies affect supply

Answer 21

Can increase business costs and discourage supple

Subsidies and grants can increase supply
Eg Eu subsidies to farmers to encourage supply of milk and meat.

Question 22

How does price of altentaive goods affect supply

Answer 22

Sellers may switch to supplying othe goods if it is mote profitable