Supply and Demand Flashcards
What are Market Forces?
Demand and supply factors
Supply =
The amount of a product businesses are prepared to sell at different prices.
Demand =
Demand is the amount of a product customers are prepared to buy at different prices.
If there is a decrease in supply where will the supply curve shift to?
It will shift to the left
On a supply and demand graph, at what point will equilibrium be reached?
The equilibrium occurs where the quantity demanded is equal to the quantity supplied.
Determinants of Demand
Factors which will affect the demand of a product
Substitutes=
A product that can be used instead of another one because they are essentially the same.
Complements=
Products in joint demand. When one product is brought so is the other. Eg: a printer and ink cartridges
Increase of demand the curve shifts to the…
Right
How does income affect demand?
If a customers income goes up they are more willing and able to purchase certain goods. Therefore demand increases.
Government Action=
Campaigns or advice from the Government which will influence public decision. Eg: healthy lifestyle promotion might alter consumer habits. Advice not to travel to certain countries etc.
Supply
Taxes and Duties=
Tax determine the willingness to produce. If tax is lower it will stimulate greater supply and vice versa.
Subsidies=
Payment by the government per unit of output. Eg: payment per litre of milk produced. Make the cost of producing lower
Inelastic Demand=
Quantity demanded is insensitive/ unresponsive in a change of price.
Why is petrol inelastic?
Because it is a necessity product and there are no substitutes.
