markets, supply and demand Flashcards
what is meant by demand?
are customers willing and able to purchase a product
which way does the dmenad curve slope
downwards
what never effects the shift of the demand curve
price
what relationship does price and demand have?
inverse
what factors effect demand?
- substitutes
- income
- trends
- advertising
what does WPIDEC mean?
weak pound imports dearer exports cheaper
what does supply mean?
the amount hwich a producer will wnat to supply of the product
which way does the supply curve slope and why
upwards
because if the product is a high price the producer will want to supply more of it to gain maximum profit when being sold
what factors effect supply?
-cost of production ( materials, rent) the higher the price of this the less likely the business wil stock it
- new technology, it makes production more efficient therefore so products are made in less time
- taxes on products will cause the business to less likely produce as it will be less in demand due to added price
- subsidies will cause a business to more likely produce this product as it makes production cheaper
what is a normal, inferior and luxury good?
normal- fruit and veg
luxury- holidays
inferor - frozen vegetables , or supermarket own brand
what are inelastic goods?
eg- fuel
if price changes demand will barely change as it is a necesticy
ped is less than one
what are elastic goods?
eg- burritos
-if price changes then demand will alter as there are substitues and it is not a necesity
- ped is greater than one
what is ped formula ?
percent change in quantity of percen t change in price
what is yed formula ?
percent change in quantity over percent change in income
