External Influences- Supply and Demand Flashcards
What is demand?
The amount of a good/service that customers are willing and able to buy at any given price
What is supply?
The amount of a good/service that sellers are willing and able to sell at any given price.
What is equilibrium?
The situation in a market where demand is equal to supply.
What is price?
The amount a customer is willing to pay.
What is cost?
The amount spent by a business in making a product.
What is excess supply? (Surplus)
The quantity of goods that suppliers want to sell is high whereas quantity demanded is low - sale would get rid of products.
What is excess demand? (Shortage)
The price is very low which is attractive to customers and therefore creates excess demand - demand will push the price up and suppliers will want to supply more bringing it closer to equilibrium.
What is inelastic demand?
The quantity is insensitive/unresponsive to a change in price.
What is elasticity of demand?
How sensitive quantity demanded is to a change in price.
State four factors that might make demand for a product in elastic
- The number of substitutes
- The degree of necessity
- Addictive
- peak demand
