Lesson 13 - Demand And Supply In Markets Flashcards
What is excess demand?
Demand is greater than supply, so there is a shortage
How does excess demand occur in sports and leisure?
- fixed number of tickets available
- price is set in advance, and so demand is in excess
- supply is inelastic
What is excess supply?
When supply is greater than demand
What is the relationship between demand and supply like in the housing market?
- 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
How does the government intervene to tackle the excess demand in the housing market?
- building council houses in order to increase the supply of houses and reduce the excess demand gap
- council houses also have much cheaper rent
Give an example of excess supply
- bumper harvest in the farming sector
- cant reduce supply to meet demand
What is the speculative bubble like in the housing market?
- house prices rise
- home owners are more confident in their investment
- others see this, which furthers demand in the housing market
Why do some people argue that healthcare should be provided by the free market?
- 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
Why do some people argue against the free market providing healthcare?
- healthcare is a merit good, and will therefore be underconsumed although it is beneficial, since many people will be unable to afford private healthcare
what are parallel markets?
secondary market operating at the same time as the primary one
- example = football tickets being officially sold, but people are also informally reselling the tickets they have
