Supply And Demand Flashcards
What is law of demand?
Demand for goods or services
As the price rises its quantity demanded falls and vice versa
Draw a demand curve
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What is law of supply?
The amount available in a market
Law - as the price of goods or service rise, its quantity supplied will rise and vice versa
Draw a supply curve
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What is equilibrium?
Demand equals quantity supplied
There is no inherent tendency to change
Draw equilibrium
X
What are shortages and surpluses?
Shortage occurs when demand exceeds the supply - implies the market price is too low
Surplus occurs when supply exceeds demand - implies market price is too high
What is shift in demand?
A change in the demand/the quantity wanted by the consumer
What factors affect/cause shift in demand? (4)
- change in consumer incomes
- population change
- consumer preference
- prices of related goods
Draw shift in demand curve
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What is shift in supply?
Change in the quantity supplied at every price
What factors affect/cause shift in supply? (3)
- change in input costs
- increase in technology
- change in size of the industry
Draw shift in supply curve
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Draw equilibrium after demand shift
Draw equilibrium after supply shift
