Demand And Supply Flashcards
What is demand?
Demand is the amount of good/services that a customer is willing and able to buy at any given price.
(As price increases demand decreases)
(As price decreases demand increases)
What is suppply?
Supply is the amount of a good/service that suppliers are willing and able to sell at any given price.
(As price increases supply increases)
(As price decreases supply decreases)
What is equilibrium?
Equilibrium is the situation in a market where demand is equal to supply.
What are the 8 demand factors?
Price, Income, Wealth, Advertising and promotional offers, Taste and fashion, Demographic changes, Government action, The price of other products (substitutes & complements)
What are the 3 supply factors?
Price, Cost, Price of other products
Explain the effects on price and quantity supplied for excess demand in a market?
If there is too much demand the price of the quantity of supply will increase as there is a higher demand, so it puts people off from buying it as they will no longer be willing/ able to spend the amount of money on it.
Explain the effects on price and (subsequently) quantity demand of excess supply in a market?
There will be a fall in price therefore an increase in quantity demand so more people will be willing/able to purchase that item.
What is price?
The amount that a customer is willing and able to pay for a product.
What is cost?
The amount spent by a business making/supplying/buying in the product.
What is tax and how does it affect supply?
Tax is a compulsory payment to the government.
As tax increase supply decreases
What are subsideies and how does it affect supply?
A subsidy is a payment from the government, to the business.
(As subsidies increase supply increases)
What is elastic demand and give an example?
Elastic demand is when the quantity of demand is sensitive to change in price (not a necessity) e.g price of burritos increases by 5% and demand decreases by 25%.
What is inelastic demand and give an example?
Inelastic demand is when the quantity is insensitive to a change in price (necessity) e.g petrol.
Describe an elastic curve and an inelastic curve.
Elastic = flatter curve Inelastic = steeper curve
What is excess supply (surplus)?
Its a situation that occurs when supply exceeds the demand at a given price.
