Supply And Demand

Question 1

Opportunity cost

Answer 1

The higher we charge for something the greater the opportunity cost, an inverse relationship. As p⬆️Q⬇️

Question 2

Effective demand VS Consumer sovereignty

Answer 2

Effective demand—>combo of desire for a product & being able to pay—> willing and able

Consumer sovereignty—>suggests that consumers control resource use by deciding what to use

Question 3

Define Demand

Answer 3

The amount of people willing an able to buy a product/service at a set price, or range of prices

Question 4

Supply in a small business

Answer 4

Supply may be lower due to ⬇️ access to factors of production or EOS

Question 5

Determinants of demand (8)

Answer 5

Price
Quality
Tastes
Substitutes
Complementary goods
Income of consumer
Population
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Question 6

Supply in labour market

Answer 6

• dependent on the standard/quality of work. If it’s dangerous or unpleasant, there will be limited supply
• work with a higher wage will increase people wanting to work as its an incentive

Question 7

Determinants of supply (5)

Answer 7

Price of product
Costs of production
Taxes and subsidiaries
State of technology
Entry and exit of firms in a market