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Econ SL > Demand and Supply > Flashcards

Demand and Supply Flashcards

1
Q

What is Demand

A

Demand is the amount of a good that buyers are willing and able to purchase at a given price and given time period. (effective demand)

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2
Q

Law of demand

A

The law of demand states that, as the price of a product falls, the quantity demanded of the product will usually increase, ceteris paribus (and vice versa).

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3
Q

Market Demand vs. Individual Demand

A

Market demand refers to the sum of all individual demands for a particular good or service.

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4
Q

Movements along the demand curve

A

Increase in quantity demanded This is caused by a decrease in price. Also called extension of demand Decrease in quantity demanded This is caused by a increase in the price. Also called contraction of demand

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5
Q

What is an outward shift of demand?

A

More is demanded at the same price

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6
Q

What is the 1st non price determinant of demand? (ITFRN)

A
  • Income
  • Tastes and preferences
  • Future price expectations
  • Price of related goods (in the cases of substitutes and complements)
  • Number of consumers
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7
Q

How does changes in consumer income affect demand for a normal good?

A

As income increases the demand for a normal good will increase.

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8
Q

How does prices of related goods/complements affect demand?

A

When an increase in the price of one good decreases the demand for another good, the two goods are called complements.

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9
Q

How does prices of related goods/substitutes affect demand?

A

When a fall in the price of one good reduces the demand for another good, the two goods are called substitutes.

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10
Q

How does future price expectations affect demand?

A

If the consumer expect the prices of goods and services to increase in the futures, the demand will shift outwards and vice versa. Example house prices

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11
Q

How does the number of consumers affect demand?

A

If the number of consumers increase,( example increases in population) the demand will increase.

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12
Q

What is supply?

A

Supply is the amount of a good/services that producers are willing and able to produce at a given price in a given time.

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13
Q

What is the law of supply?

A

The law of supply states that, as the price of a product falls, the quantity supplied of the product will usually decrease, ceteris paribus (and vice versa).

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14
Q

Market supply vs. Individual supply

A

Market supply refers to the sum of all individual supplies for all sellers of a particular good or service.

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15
Q

What is an extension of supply?

A

Increase in quantity supplied, caused by an increase in price.

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16
Q

Outward shift of supply

A

More is supplied at the same price ( increase in supply)

17
Q

Prices of related goods/Joint supply

A

Joint supply of two or more products refers to production of goods that are derived from a single product, so that it is not possible to produce more of one without producing more of the other.

18
Q

Prices of related goods/Competitive supply

A

Competitive supply refers to a situation where more than one product can be produced from the same factors of production. For example, a farmer could use his land and labour to produce two different crops – Tomatoes or Spinach. While cultivating tomatoes, the factors used cannot then be used to produce spinach..

19
Q

What is an inward shift of demand?

A

Less is demanded at the same price ( decrease in demand)

20
Q

How does changes in consumer income affect demand for an inferior good?

A

As income increases the demand for an inferior good will decrease.

21
Q

What is a contraction of supply?

A

Also called Decrease in quantity supplied, this is caused by a decrease in the price.

22
Q

Inward shift of supply

A

Less is supplied at the same price ( decrease in supply)

23
Q

What is the 2nd non price determinant of demand? (ITFRN)

A
  • Income
  • Tastes and preferences
  • Future price expectations
  • Price of related goods (in the cases of substitutes and complements)
  • Number of consumers
24
Q

What is the 3rd non price determinant of demand? (ITFRN)

A
  • Income
  • Tastes and preferences
  • Future price expectations
  • Price of related goods (in the cases of substitutes and complements)
  • Number of consumers
25
Q

What is the 4th non price determinant of demand? (ITFRN)

A
  • Income
  • Tastes and preferences
  • Future price expectations
  • Price of related goods (in the cases of substitutes and complements)
  • Number of consumers
26
Q

What is the 5th non price determinant of demand? (ITFRN)

A
  • Income
  • Tastes and preferences
  • Future price expectations
  • Price of related goods (in the cases of substitutes and complements)
  • Number of consumers
27
Q

What is the 1st non price determinant for Supply? (FRTFT)

A
  • Changes in costs of factors of production (FOPs)
  • Prices of related goods (in the cases of joint and competitive supply)
  • Indirect taxes and subsidies
  • Future price expectations
  • Changes in technology Number of firms
28
Q

What is the 2nd non price determinant for Supply? (FRTFT)

A
  • Changes in costs of factors of production (FOPs)
  • Prices of related goods (in the cases of joint and competitive supply)
  • Indirect taxes and subsidies
  • Future price expectations
  • Changes in technology Number of firms
29
Q

What is the 3rd non price determinant for Supply? (FRTFT)

A
  • Changes in costs of factors of production (FOPs)
  • Prices of related goods (in the cases of joint and competitive supply)
  • Indirect taxes and subsidies
  • Future price expectations
  • Changes in technology Number of firms
30
Q

What is the 4th non price determinant for Supply? (FRTFT)

A
  • Changes in costs of factors of production (FOPs)
  • Prices of related goods (in the cases of joint and competitive supply)
  • Indirect taxes and subsidies
  • Future price expectations
  • Changes in technology Number of firms
31
Q

What is the acronym for NPD of demand?

A

(ITFRN)

32
Q

What is the acronym for NPD of supply?

A

FRTT

33
Q

What is the 5th non price determinant for Supply?

A
  • Changes in costs of factors of production (FOPs)
  • Prices of related goods (in the cases of joint and competitive supply)
  • Indirect taxes and subsidies
  • Future price expectations
  • Changes in technology Number of firms
34
Q
A

Econ SL (18 decks)

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