Demand & Supply (Miss Blackwell) Flashcards
Demand
The amount of a product/service that customers are willing and able to buy at any given price.
Supply
The amount of a product/service that sellers are willing and able to sell at any given price.
Equilibrium Price
The situation in a market where demand is equal to supply.
With excess demand the price will…?
Increase
With excess supply the price will…?
Decrease
As price decreases, demand…?
Increases
As a person’s income increases, demand…?
Increases
Price
The amount that a customer is willing and able to pay.
When price increases, supply…?
Increases
When price decreases, supply…?
Decreases
Cost
The amount spent by a business making/buying/supplying the product.
As cost decreases, supply…?
Increases
As cost increases, supply…?
Decreases
Taxes
A compulsory contribution to state revenue by the government.
As taxes increase, supply will…?
Decrease
Subsidies
A sum of money granted by the state / public bodies.
As subsidies increase, supply will…?
Increase
If the price of one product decreases, but the price for a similar one stays the same, supply for that one will?
Increase
With product surplus, what needs to happen to price?
Decrease
With product shortage, what needs to happen to price?
Increase
Elasticity of Demand
Measures how sensitive quantity demanded changes with a change in price.
Inelastic Demand
The quantity demanded is insensitive to price change.
Elastic Demand
Quantity is sensitive to a change in price.
Elastic products can be described as…?
Luxury Products
