Demand + Supply Flashcards

Key terms

1
Q

Demand

A

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

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2
Q

Supply

A

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

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3
Q

Equilibrium Price

A

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

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4
Q

Elasticity Of Demand

A

Measures how sensitive quantity demanded is to a change in price.

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5
Q

Inelastic Demand

A

QD is insensitive to a change in price. It will not change significantly. There aren’t any substitutes and it’s a necessity. E.g. Petrol because it is a necessity.

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6
Q

Elastic Demand

A

QD is sensitive to price, it will go up/down significantly. They have many substitutes or are a luxury. E.g. A Newspaper as their are substitutes.

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7
Q

Complement

A

A product that is in conjunction with another e.g DVD player and DVDs.

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8
Q

Substitute

A

An alternative product that serves the same purpose.

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9
Q

Wealth

A

How much someone is worth, including the value of their house is owned. Value of all assets.

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10
Q

Income

A

The money coming in from working.

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11
Q

Demographics

A

Characteristics of the human population.

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12
Q

Tax

A

An amount of money paid to the government.

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13
Q

Subsidy

A

Payment from the government to businesses to insentify demand.

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14
Q

Excess Supply

A

If the price is set too high, excess supply will be created.

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15
Q

Excess demand (shortage)

A

Created when price is set below the equilibrium price. Because the price is so low, too many consumers want the good while producers are not making enough of it.

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