Demand And Supply Flashcards
Market
Market is a place where buyers and sellers interact and trade goods and services
Types of markets
Final Markets
Factor Markets
Commodities Market
Global Markets
National Markets
Black Markets
Final Markets
actual locations where goods are
bought and sold e.g. farmers market, supermarket
Factor Markets
where factors of production are bought and sold e.g. labour market and property market
Commodities Markets
where raw materials used in production are bought and sold e.g. oil, gold
Black markets
where goods are sold illegally
Demand
Demand is the quantity of a product that consumers are willing to buy at a given price.
● When prices are low, the demand for a product increases
● When prices are high, the demand for a product decreases
Supply
Supply is the quantity of a product that producers are willing to sell at a given price.
● When prices are high, the supply of a product increases
● When prices are low, the supply of a product decreases
Law of demand
● If the price of a product rises the quantity demanded falls
● If the price of a product falls the quantity demanded rises
Factors affecting demand
Price, fashion, season, advertising, expectations of buyers, income levels, price of substitute goods, price of complementary goods
Price
Whenthepriceofagoodgoesup,goodsaremoreexpensiveandthe demand will fall. When the price for a good goes down, goods are cheaper and the demand will rise.
Fashion
As consumer tastes change, demand for products will change
Season
Demandforsomeproductschangedependingontimeofyear
Advertising
Productsthatareheavilyadvertisedmayseeanincreasein demand
Expectations of buyers
If customers expect prices to rise in the future they may demand more now. Similarly, if customers expect prices to fall in the future, they may demand less now
Income levels
If a person’s income rises, they will demand more goods and services
Price of substitute goods
Some goods have close substitutes. This means they can be used as alternatives to each other. E.g. Coca Cola and Pepsi. When the price of Coca Cola goes up, some consumers may switch to the cheaper alternative Pepsi
Price of complementary goods
Some goods are used jointly e.g. Tennis Racket and Tennis Balls. If the price of a Tennis racket goes up, the demand for Tennis balls will fall.
Law of supply
● If the price of a product rises, the quantity supplied rises
● If the price of a product falls, the quantity supplied falls
Labour
if a large number of people are unemployed in Dublin. There is excess supply, this means that workers will be willing to accept lower wages.
Factors effecting supply
Price, price of related goods, production costs, technology, environment
Price of related goods
The price of substitute and complementary goods may cause the consumers to switch to/stop buying our product which will affect the available supply of our product
Production costs
W hen the cost of making a product is low, more goods will be supplied as it is cheaper
Technology
improvements in technology and machinery make it easier for goods to be made which increases supply
Environment
good/bad weather can affect a crop. Bad weather might mean the is less supply of wheat. Good weather might mean that there is to much supply of whea
Demand curve
This is a graph that illustrates the expected demand for a product at different price levels
Drawing a demand curve
Rules for Drawing a Demand Curve:
ALT
Notes Copy
A = Axis (Number & spread out your Axis evenly e.g. go up in 5’s or 10’s)
L = Label (Label your Axis: Price/Quantity)
T = Title (Give your graph a meaningful title)
Supply curve
This is a graph that illustrates the quantity of a product that a seller will supply at different price levels
Market equilibrium
In the marketplace, supply and demand interact until a balance or equilibrium position is reached
Movement Along a Demand Curve
: This is caused by a change in the price of the good itself.
Shift in the demand curve
This is caused by a change in any non-price factor affecting demand. E.g. a change in consumer income. A shift to the right results in an increase in the quantity demanded, while a shift to the left causes a fall in the quantity demanded
Shift in the supply curve
This is caused by a change in any non-price factor of supply e.g.cost of production.
A shift to the right results in an increase in the quantity supplied, while a shift to the left causes a fall in the quantity supplied.
