Demand and Supply

Question 1

What is Demand?

Answer 1

The amount of a good/service that customers are willing and able to buy at any given price.

Question 2

What happens to demand and supply when price increases?

Answer 2

Demand decreases and Supply Increases

Question 3

What happens to demand and supply when price decreases?

Answer 3

Demand increases and Supply decreases

Question 4

What is Supply?

Answer 4

The amount of a good/service that sellers are willing and able to sell at any given price.

Question 5

What is Equilibrium Price?

Answer 5

The situation in a market where demand is equal to supply i.e. both parties are happy. In theory, customers can buy what they want and shops have no unsold stock.

Question 6

What are the 6 determinants of demand?

Answer 6

Wealth, Advertising, Taste and Fashion, Demographic changes, Government action, The price of other products

Question 7

What are the 5 determinants of supply?

Answer 7

Price, Costs, Taxes, Subsides, Price of other Products

Question 8

What is elasticity of demand?

Answer 8

Measures how sensitive quantity demanded is to change in price