Lesson 13 - Demand And Supply In Markets Flashcards
1
Q
What is excess demand?
A
Demand is greater than supply, so there is a shortage
2
Q
How does excess demand occur in sports and leisure?
A
- fixed number of tickets available
- price is set in advance, and so demand is in excess
- supply is inelastic
3
Q
What is excess supply?
A
When supply is greater than demand
4
Q
What is the relationship between demand and supply like in the housing market?
A
- demand is rising a lot faster than supply over the last few years
- rise in population, incomes
- excess demand for housing has driven up overall prices
5
Q
How does the government intervene to tackle the excess demand in the housing market?
A
- building council houses in order to increase the supply of houses and reduce the excess demand gap
- council houses also have much cheaper rent
6
Q
Give an example of excess supply
A
- bumper harvest in the farming sector
- cant reduce supply to meet demand
7
Q
What is the speculative bubble like in the housing market?
A
- house prices rise
- home owners are more confident in their investment
- others see this, which furthers demand in the housing market
8
Q
Why do some people argue that healthcare should be provided by the free market?
A
- the free market will be allocatively efficient in order to provide what consumers demand reach an equilibrium
- they will also be productively efficient and try to get costs as low as possible, which will be reflected through lower prices
9
Q
Why do some people argue against the free market providing healthcare?
A
- healthcare is a merit good, and will therefore be underconsumed although it is beneficial, since many people will be unable to afford private healthcare
