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Business-Miss Blackwell > External Influences-demand, supply,elasticity > Flashcards

External Influences-demand, supply,elasticity Flashcards

1
Q

Define 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

What happens to demand when the price of a good/service is too high?

A

Demand decreases

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3
Q

What happens to demand when the price of a good/service is low?

A

Demand increases

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4
Q

Define supply

A

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

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5
Q

What happens to supply when the price of a good/service is high?
Why?

A

Supply increases

As it’s more profitable

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6
Q

What happens to supply when the price of a good/service is low?
Why?

A

Supply decreases

As it’s less profitable

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7
Q

Which direction does a demand curve go?

A

Downwards

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8
Q

Which direction does a supply curve go?

A

Upwards

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9
Q

Define the equilibrium price

A

The situation in a market where demand is equal to supply

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10
Q

What happens to the demand or supply curve if price is mentioned?

A

You move along the curve not shift it

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11
Q

What way does the curve shift if there is a positive change?

A

To the right

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12
Q

What way does the curve shift if there is a negative change?

A

To the left

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13
Q

What does an increase in demand mean for quantity demanded?

A

An increase in demand means an increase in quantity demanded at every given price

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14
Q

What are the determinants of demand?

A 
Wealth 
Taste/fashion 
Government action 
Advertising/promotional offers
Demographic changes 
Price of other products-substitutes, complements
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15
Q

What are the determinants of supply?

A 
Price 
Costs 
Taxes
Subsidies
Price of other products
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16
Q

Define price

A

The amount the customers are willing and able to pay

17
Q

What happens to supply when price increases?

A

Supply increases

18
Q

What happens to supply when price decreases?

A

Supply decreases

19
Q

Define costs

A

The amount spent by a business making/supplying/buying in the product

20
Q

What happens to supply if costs decrease?

A

Supply increases

21
Q

What happens to supply if costs increase?

A

Supply decreases

22
Q

What would happen to supply if taxes are raised?
Why?
What happens to the supply curve?

A

Business would supply less
As they wouldn’t have as much money to spend on products
Supply curve would shift to the left

23
Q

Define a subsidy

A

A payment from the gov. for every unit supplied

24
Q

What would happen to supply if subsidies are raised?
Why?
What happens to the supply curve?

A

Business would supply more
As they’d have extra money to use
Supply curve would shift to the right

25
Q

What is the price of other products known as?

A

Competitive supply

26
Q

What happens to supply when the price of other products increase?
Why?

A

Business supplies more

As customers would be willing to pay less

27
Q

What is elasticity of demand?

A

How sensitive/responsive quantity demanded is to a change in (measured)price

28
Q

What is meant by inelastic demand?

A

How insensitive/in-responsive quantity demanded is to a change in price

29
Q

What are some examples of inelastic products? Why are they inelastic?

A

Petrol
Morning trains (peak)
Cigarettes
As they are necessary and there’s not many substitutes

30
Q

What is meant by elastic demand?

A

When the quantity demanded is sensitive to a change in price

31
Q

What are some examples of elastic products? Why are they elastic?

A

Fast food
Newspapers
Furniture
As they have many substitutes and are luxuries

32
Q

How do elastic products effect the demand curve?

Changes in P and Q

A

Makes the line flatter
Smaller change in P
Bigger change in Q

33
Q

How do inelastic products effect the demand curve?

Changes in P and Q

A

Makes the line steeper
Bigger change in P
Smaller change in Q

34
Q

What 4 factors might make demand for a product inelastic?

A

The no. of substitutes available
The degree of necessity
Whether the good is subject to habitual consumption
Peak and off peak demand

Business-Miss Blackwell (14 decks)

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