section 2 Flashcards
what is demand?
the number of people interested in a product that a business sells
what is supply?
the quantity of product a business is able to afford at a given price and time
what factors influence demand?
trends constantly changing
lifestyle
weather
adverts
what is equilibrium price?
where’s the supply matches the demand creating the market clearing price
what is surplus?
where the demand quantity does not reach the quantity supplied resulting in an excess supply
what is a shortage?
where’s the quantity supplied does not meet the required amount demanded. This means that price will have to increase
how do you calculate ped?
ped= % change in demand/ % change in price
factors affecting supply?
external shocks
government subsidies
new tech
cost of production
distribution
