Price Theory Flashcards
What is the definition of demand?
The quantity purchased at a given price and within a certain period
What are the components of demand?
A desire to possess the product
The ability to pay for the product
The willingness to pay for the product
What is the relationship between demand and price?
The lower the price, the greater the demand. That is generally the case
What are the two columns of a demand table?
Price per unit
Quantity demanded
What is the purpose of the demand curve?
It makes it possible to calculate the changes in demand caused by changes in price
What are the factors of a demand curve?
Heading Both scales start at 0 Free hand curve Doesn't have to be line of best fit Allowed to use colour The demand curve must be labelled with "DD"
What will the demand curve look like?
It should slope downward from left to right
What is supply?
The quantity of a particular commodity that producers are able to offer for sale, at a given price and a given time
What is the difference between stock and supply?
Supply refers only to the part of stock offered for sale
What is the relationship between price and supply?
Direct
As the price decreases, so will the supply
What are the two columns in a supply table?
Price per unit
Quantity supplied
What is the equilibrium price?
Where the supply curve and the demand curve meet
This is the price that the company will use
What will a supply curve look like?
It will go up from left to right
What is important when drawing a supply/ demand curve?
Key
Label axes x and y
What does the law of demand state?
That More of a commodity is demanded at a lower price
