External Influences Flashcards
Demand
The amount of a good / service that customers are willing to buy at any given price
Supply
The amount of a good or service that seller are willing and able to sell at any given price
Equilibrium price
The situation in the market where demand is equal to supply and both parties are happy. In theory, customers can buy what they want and shops have no unsold stock.
Price
How much a product costs. Can affect demand
Income
The amount that someone earns.
Wealth
The combined value of someone’s assets. (Money, shares, property value etc.)
Excess supply
The producers are producing more goods than are demanded. Shade the bottom of the graph.
Excess demand / Shortage
Consumers are demanding more than the seller can provide. Shade the top of the graph
Elasticity of demand
How sensitive / responsive quantity demanded is to a change in price.
Inelastic demand
The quantity is insensitive / unresponsive to a change in price.
Elastic demand
Quantity is sensitive / responsive to a change in demand
Demographic changes
Changes in the size and composition of a population OR the characteristics of human population groups.
Taste and fashion
The products that are popular at the time, that customers will want to buy. An example is jumpers in winter
Government action
A campaign by the Government to promote or discourage something or the Government providing subsidies to businesses to help them grow.
Substitutes
Alternative goods that can be used for the same purpose
Complements
Products that are bought together and used in conjunction, like a printer and printer ink.
Demand factors
Wealth, Advertising, Taste and fashion, Government action, the price of other products (subsidies and complements)
Supply factors
Price, Costs, Taxes, Subsidies, price of other products
Subsidies
Money from the Government given to a business it believes to be beneficial. A payment for every unit supplied.
Competitive supply
A fall in the price of one product makes it more profitable to supply another.
Competition
Rivalry amongst sellers
Market
Any situation where buyers and sellers are in contact to establish price
Non-physical market
A business with no physical storefront, exist because of the convenience that they offer
Physical market
A business with an actual storefront, exist still because of the personalisation that they offer