Markets - Unit 1 Flashcards
What is the structure of a demand curve?
Sloping downwards - negative gradient
What is the only factor that causes movement along the demand curve?
Price change
What is an increase in quantity demanded called?
an Extension
What is a decrease in quantity demanded called?
a Contraction
What six factors also cause a shift of the demand curve?
- A change in income
- Change in price of substitute goods
- Price of complementary goods changes
- Advertising effectiveness
- Population change
- Fashion/taste changes
What is an increase in demand?
An outward shift
What is a decrease in demand?
An inward shift
What is the structure of the supply curve?
Sloping upwards - positive gradient
What effect will a rise in price have on the supply?
Quantity supplied will rise because a producer will seek to maximise profit
What is an increase in quantity supplied as a result of price rises called?
An extension
What is a decrease in quantity supplied as a result of price falling called?
A contraction
What can only cause movements along the supply curve?
Price changes
What five factors can cause a shift in supply?
- Costs of production
- Price of other goods - scarcity
- Technology - productivity
- Natural shocks
- Government policies - subsidies etc
What happens to the supply curve if more firms enter the market?
It shifts outward
What is an increase in supply referred to?
An outward shift
