Demand Flashcards
Demand is
Amount of prod consumers willing/abel to purchase at a given price at given time.
Shift in demand curve outwards =
Increase quantity demanded
Suppliers
Quantity of goods /services
Willing and able to make available on market at a given price ,at a given time.
Demand and supply curve cross over
Market equilibrium
When not balanced
Could be surplus-supply exceeds demans,maybe price too high
Or shortage -demand exceeds supply ,price too low
When equal demand curve
Market clearing price
Price elasticity of demand formular
% change in quantity demanded÷
%change in price.
Price elastic
Price elasticity greater than 1
Where quant demand rises n falls by larger % than price change .ppl won’t by cookie’s if its too much money
Price inelastic
Value between 0 and 1
Change in price leads to small %change in quantity demanded.like ppl not gonna stop buying petrol just Cus its expensive
Income elasticity of demand formular
%quantity demanded÷
%change in income
Income elastic
Greater than 1
Quant demanded rises or fall by larger % than income change.like when ppl want designer clothes but too much high price, they just won’t get the clothes cus can’t afford.
Income inelastic
Income elasticity between 0 n 1
Quant demanded rises or fall by smaller %than income change.like petrol
Inferior goods
Negative income elasticity
Incomes decrease=demand increase vice versa
Like tinned food.
If less Income ppl need more inferior
Normal goods
Product with positive income elasticity.
Income increase demand demand increases.
Luxury goods
Demand increase alot when income increase vice versa
Positive income elasticity greater than 1
