Lesson 5 Flashcards
Quantities of a particular good and service customer are willing and able to buy at different possible prices.
Demand
Customers buy more of a good when its prices decreases and less when its prices increases.
Price goes up, demand goes down when price goes down, demand goes up.
THE LAW OF DEMAND
FACTORS OF DEMAND:
Changes in Income (the income effect)
Prices of Related Goods
Price Expectation
Changes in the number of buyers (Population)
Changes in Tastes and Preferences
The amount of a product that is offer for sale at all possible prices in the market.
Supply
Tendency of suppliers to offer more of a good at a higher price and less at lower prices.
-When price goes up, supply goes up and when price goes down, supply goes down.
THE LAW OF SUPPLY
The Law of Demand
describes how
price affects
__________
CONSUMERS
The Law of
Supply describes
how price affects______
PRODUCERS
DETERMINANTS OF SUPPLY:
Cost of Production/Inputs
Technology
Number of Sellers
Taxes and Subsidies-
Weather
Refers to techniques or methods of production.
Technology
More sellers or more factories means an increase in supply. On the other hand, less sellers or factories less supply.
Number of Sellers
Certain Taxes increase cost of production. Higher taxes discourage production because it reduces the earnings of businessmen.
Taxes and Subsidies
Production of goods also depends on weather conditions.
Weather
where supply and demand intersect.
Equilibrium price
