Supply and Demand Flashcards
What is a market?
A market exists wherever consumers and producers come together for the purpose of exchange.
What’s a markets purpose?
a market is a mechanism that allocated resources through the interation of demand and supply and prices.
A market equilibrium is when
demand = supply
demand definition
demand refers to the quantity of a product that buyers are willing and able to buy at various prices over a time period, ceteris paribus.
Reasons for different shaped curves
differences in the price elasticity of demand at various prices along the curve.
If the exam asks for a change draw
Either supply or demand
if the exam askf for a change in market
draw both curves!
Market equilibruim defintion
is a situation that occurs when the market price is such that the quantity demanded exactly equals quantity supplied.
financial markets define
government bonds, stock market, etc.
producer surplus define
the difference between the price a producer is prepared to sell a product for and the price that they actually sell it for.
evaluate
population trends elasticity of supply changes in determinants of demand extent of the change in price changes in the determinants of supply
Joint supply definition
where a firm producers more than one product together
composite supply definition
where a product produced by a firm serves more than one market.
comparative supply definition
a situation in which a firm can use its factors of production to produce alternative products. More of one less of another.
determinants of supply
change in costs of production
changes in state of technology in production
changes in price/profitability of other goods the firm could supply.
firms’ expectations of future prices.
