Demand And Supply Flashcards
What is a market
A m i a p w b a s i a t g a s
A Market is a place where buyers and sellers interact and
trade goods and services
What are the 5 types of markets called
F m
F m
C m
G m
B m
Final Markets
Factor Markets:
Commodities Markets
Global Markets
Black Markets
What is 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
What is supply
S i t Q o a p t p a w t s a a g p
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
What is the 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
What are the 3 relationships between demand and price
H c
S o c
H
Housing Crisis
Sold Out Concert
Holidays
Housing (relationships between demand and price)
i d f h i i h c t p t r
Increased demand for houses in Ireland has
caused the price to rise
Sold Out Concert (relationships between demand and price)
i d f a p c c t p o t t r
Increased demand for a popular concert causes the price of tickets to rise
Holidays ( relationships between demand and price)
H a f p r d s h a d i h a t t
Hotel and Flight prices rise during school holidays as demand is higher at this time.
What are the 8 Factors affect demand
P
F
S
A
E o b
I c
P o s g
P o c g
Price 1
Fashion 2
Season 3
Advertising 4
Expectations of buyers 5
Income levels 6
Price of substitute goods 7
Price of complimentary goods 8
Factors affect demand PRICE
Falls
And
Rises
When the price of a good goes up, goods are more expensive and the
demand will fall. When the price for a good goes down, goods are cheaper
and the demand will rise.
Factors that affect demand FASHION
A c t c, d f p w c
As consumer tastes change, demand for products will change
e.g. Furby’s were popular in 2001 but not anymore.
Factors that affect demand SEASON
D f s p c d o t o y
Demand for some products change depending on time of year e.g.
ice-cream in the summer.
Explain how advertising can affect demand
P t a h a m s a i i d
Products that are heavily advertised may see an increase in
demand. e.g. Ed Sheeran concert
Explain how expectations of buyers can affect demand
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.
Explain how Income level is a factor that can affect demand
I a p i r, t w d m g a s
If a person’s income rises, they will demand more goods and services
Explain how price of substitute good are a factor that can affect demand
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.
Explain how the price of complimentary goods are factors that can affect demand
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.
What is the law of supply
I t p o a p r/f, t Q s r/f
● If the price of a product rises, the quantity supplied rises
● If the price of a product falls, the quantity supplied falls
What are the 3 types of relationships between price and supply
S
L
W
Strawberries
Labour
Wheat
Strawberries ( relationship between price and supply
G w m r i a g c o s, t m L a e s t t f m h t s t g r o t
good weather may result in a good crop of strawberries. This might lead an excess supply that the farmer might have to sell cheaper to get rid of them.
Labour (relationships between price and supply)
i a L n o p a u i D, t m t w w b w t a L w
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
Wheat (relationships of prove and supply
B w m r i a p c o w. F m c a h p a t i a s o w
Bad weather may result in a poor crop of wheat. Farmers
may charge a higher price as there is a shortage of wheat.
What are the 5 factors affecting supply
P
P o r g
P c
T
E
Price
Price of related goods
Production costs
Technology
environment
Explain how price is one of the factors of affecting supply
When the price of a good goes up, goods are more profitable for the producer so the supply will rise. When the price of a good goes down, goods are less profitable for the producer so they will supply less.
Explain how price of related goods is one of the factors that affect demand
T p o s a c g m c t c t s t/s b o p w w a t a s o o p
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.
Explain how production costs is a factor affecting supply
W t c o m a p i L, m g w b s a i i c
When the cost of making a product is low, more goods will be supplied as it is cheaper.
Explain how technology is a factor affecting supply
i i t a m m i e f g t b m w i s
improvements in technology and machinery make it easier for goods to be made which increases
supply
Explain how environment is a factor affecting supply
good/bad weather can affect a crop. Bad weather might mean the is less supply of wheat. Good
weather might mean that there is too much supply of wheat.
What is the equilibrium point
In the marketplace, supply and demand interact until a balance or equilibrium position is reached.
