Lesson 7 - Demand And Supply Flashcards
What is consumer surplus?
The extra amount that consumers would be willing to pay above what they actually pay
What is producer surplus?
Extra amount producers gain from selling a good or service above what they were willing to sell for (sign the consumers are paying too much
What factors cause a shift in demand?
- change in fashion/taste
- change in the price of substitutes
- change in the price of complements
- changes in disposable income
- advertising
What factors cause a shift in supply?
- changes in productivity
- indirect taxes
- subsidies
- changes in the costs of production
- advances in technology
- changes in the price of other goods (profit elsewhere)
What is a merit good?
Goods that are more beneficial for consumers than they realise
- underconsumed
- positive externalities
What is a demerit good?
Goods that are more harmful than we realise
- overconsumed
- negative externalities
Impacts of productivity on a workforce - COR
Lower costs, lower prices, more competitive, more jobs and growth