-supply and demand- Flashcards
What is demand?
The quantity that customers are willing sonf able to buy at a given piece within a given period of time
What is the demand curve?
The higher the price, the lower the quantity demanded and visa versa.
x asis = quantity demanded.
y axis = price.
The quantity demanded of a products in the market at different price points
Causes for changes in demand?
Price. Incomes. Fashion, tastes, preferences. Advertising and branding. External shocks (e.g loss of consumer confidence in brand/product). Seasonal factors
What is supply?
The quantity of a good/service that a producer is willing and able to supply onto the market at a given price within a given time period.
What is the supply curve?
As price increases, as does supply (with all other factors remaining consistent).
Producers respond profit motives.
x axis = quantity of supply.
y axis = price
Causes for change in supply?
Costs of production.
External shocks.
New technology.
Taxation and subsidies.
How do costs of production affect supply?
Lower unit costs mean that a business can supply more at each price, e.g via higher productivity.
Higher unit costs cause an inward shift of supply, e.g rise in wage rates, energy prices/ raw materials.