Chapter 14, Demand and Supply and Market forces

Question 1

Market Forces

Answer 1

Demand and Supply

Question 2

Market price effect on demand

Answer 2

if the market price is high there will be a low demand but if it is low there will be a high demand

Question 3

Supply

Answer 3

the quantities that are offered for sale by a business

Question 4

Equilibrium

Answer 4

the situation in a market when demand is equal to supply

Question 5

Factors that Determine demand

Answer 5

• Price
• Income
• Wealth
• Advertising, Promotional offers, and public relations
• Taste and fashion
• Demographic changes
• Government action
• The price of other goods
  
  • substitutes
  • Complements

Question 6

Substitutes

Answer 6

an alternative product that serves the same function another

Question 7

Complement

Answer 7

a product that is used, and is therefore bought, in conjunction with another

Question 8

Factors that determine supply

Answer 8

• Price
• Costs
• Taxes and subsidies
• Price of other products

Question 9

Subsidy

Answer 9

a payment from the government to encourage a business to increase supply

Question 10

Elasticity of demand

Answer 10

shows response demand is to changes in price
Elastic: where the change in demand that results from price changes is greater than the change in price that caused
Inelastic: Where the change I demand that results from price change is less than the change in price that caused it

Question 11

What makes demand elastic or inelastic

Answer 11

if a product has few substitutes then its demand is likely to be inelastic, vise versa