Demand, supply and market equilibrium. Flashcards
What is demand
Demand is the amount of a good that consumers are willing and able to buy at a given price.
how is a shift in demand shown on a diagram
Another line placed to the left or right of the origional.
Name three determinants of demand
- Price
- Advertising
- Income
- Weather
- Cost of credit (interest rate)
- Change in the price of compliment goods
- Change in price of substitute goods
- Breaking news
- Quality (design & innovation)
- Taste and preferences
- Change in size of population
- % Change TAX
- Changes in expectations
Name 4 factors that affect demand.
1.Advertising
2.Income
3.Fashion and tastes
4.Price of substitute goods
5.Price of complimentary goods
6.Demographic changes
what is supply
the amount of a good or service that producers are willing to offer to consumers at a specific price.
What cuases a change in supply
Shifts in demand are caused by anything other than a change in price
What are the determinites of supply
Population
Advertisement
Substitutes
Income
Fashion
Intrest
Complimentary goods
Externalshocks
What would a shift to the right indicate on a demand diagram
An increase in quantity
What would a Shit to the left indicate mean in a Supply diagram
A decrease in quantity demanded
what is Market equilibrium
Supply equals demand.
Market equilibrium is a situation where supply equals demand
