Chapter 7: Demand Flashcards
1
Q
Demand factors
A
- Change in income
- Changes in the price of related products
- Advertising campaigns
- Changes in population structure
- Changes in taste and fashion
- Change in weather
- Expectation about future prices
- Special events
2
Q
Supply factors
A
- Changes in cost of production
- Improvements in technology
- Taxes
- Subsidies
- Weather conditions and health of livestock and crops
- Prices of otehr products
- Disasters and wars
- Discoveries and depletion
3
Q
Determinants of PED
A
- Avalability of substitutes
- Proportion of income spent on the product
- Necessity or a luxury
- Addictive or not
- Whether its purchase can be postponed
- How the market defined (more narrow = more elastic) - eg. demand for one brand of tea is more elastic than demand for tea in general
- Time period (short term - consumers will not have sufficient time to notice the change in price)
4
Q
Changes in PED
A
- Higher price = more elastic
- Lower price = less elastic
5
Q
Determinants of PES
A
- Time taken to produce/cost of altering its supply
- Feasibility of storing it
- Supply more elastic as time period increases - producers have more time to adjust supply
- Advances in technology make supply more elastic
