EQUILIBRIUM POINT Flashcards
the higher the price, the lower the quantity demanded and vice versa
law of demand
if all other factors remain equal, the higher the price of a good, the fewer people will demand that good
law of demand
the demand curve is always downward sloping due to the law of diminishing marginal utility
law of demand
what are the determinants of demand
income, population, taste and preferences, price expectations, prices of related goods
people buy more goods and services when their income increases but will buy less if their income decreases
income
more people means more demand for goods
population
demand for goods and services increases when people like or prefer them
taste and preferences
when people expect the prices of goods, especially basic commodities like rice, soap, cooking oil, or sugar to increase tomorrow or next week, they will buy more of these goods
price expectation
when the price of certain good increases, people tend to buy substitute products
prices of related goods
the higher the price, the higher the quantity supplied and vice versa
law of supply
as the price of a product increases, companies will produce more of the product
law of supply
when graphing the supply vs. the price, the slope ________
rises
what are the determinants of supply?
technology, cost of production, number of sellers, taxes and subsidies, and weather
techniques or methods of production. modern increases supply of goods
technology
price of raw materials together with the cost of labor. as the price of raw materials or salary of laborers increases, it means higher cost of production
cost of production
