homework Flashcards
What is the law of demand?
when price rises demand falls and when price falls demand rises.
What factors effect demand?
prices, income, fashion, advertising, external shocks and seasonal
what effect does a change in price have on income?
fall in price increases purchasing power, for normal goods demand rise with an increase in income
what effect does a change in price have on substitution?
makes a good relatively cheaper compared to substitutions, some customers will buy a different good leading to higher demand
what is the definition of demand?
the amount someone is willing to pay for a product
what is a demand curve?
the amount demanded of a product in a market at different price points
what is the basic law of supply?
as the price rises so does supply, and as price decreases so does supply
what factors cause change in supply?
cost of production, external shocks, new technology, taxation and subsidies
what is the definition of supply?
the quantity of a good and service that a producer is willing and able to supply in the market
what is a supply curve?
the amount that can be supplied in the market at different points in price
what is a subsidy?
any form of government support, financial or otherwise
what is market equilibrium?
when there is a balance between price and quantity demanded
what is market demand?
the total quantity demand within a market
what is market supply?
the total quantity supplied to a market
what is price elasticity?
when the value is above 1, the change in demand is greater than the change in price
