Supply And Demand Flashcards
Explain the supply curve
As the cost increases, the quantity sold increases
Name 5 factors affecting supply
What is movement?
When there is a change in price AND quantity
What is shift? Give an example
When there is a change in quantity but price remains the same. E.g the quantity of hand sanitiser sales increased in Covid
What is an equilibrium?
When the supply and demand equal each other
Qty supplied = qty demanded
What is supply surplus?
When supply is higher than demand
What is supply shortage?
When demand is higher than supply
What are the construction industry supply factors ?
Labour
Credit
Investment
Material cost
Land
Plant
Market regulation
Competition
What is demand?
The desire to buy a good or service
What are the 3 stages of demand?
The consumer must;
Want it
Be planning to buy it
Be able to afford it
What are 5 factors affecting demand?
Change in expectations. E.g petrol shortages
Change in income - normal goods. E.g luxury car sales will increase if income increases
Change in income - inferior goods. E.g frozen food sales will decrease if income increases
Change in preferences. E.g fashion
Change in number of consumers
Explain the demand curve
The higher the price of a product the less people will buy it
What is quantity demanded?
The amount that consumers plan to buy at a given price
What is money price?
The amount of money it takes to buy a good or service
What is opportunity cost?
The loss of other alternatives when the other option is chosen
What is relative price?
Knowing if a product is good value for money when comparing it to a similar product
What is marginal cost?
If a product cost £10 to make and only £15 to make two, the marginal cost would be the difference between the cost of making one and two ( £5 in this example)
What is marginal revenue?
The additional revenue per unit gained from selling multiple units
Marginal revenue = increase in total revenue - increase in quantity
What is the difference in marginal cost and marginal revenue?
Marginal cost = the amount it costs to make a product
Marginal revenue = the amount you sell the product for
What is self interest?
To seek your own personal gain
What is elastic demand?
When a change in quantity is high due to the change in the price of the item. E.g luxury items
What is inelastic demand?
When there is a change in price but not quantity sold. E.g prescription drugs
