Supply And Demand Flashcards
Define demand
The amounting a consumer is willing and able to buy at a particular price and time
State the law of demand
The law of demand refers to the inverse relationship between price and quantity demanded. When price rises, demand contract. When price falls demand expands. People will buy more at a lower price.
State 7 non price factors affecting demand
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Price of substitute goods
Price of complementary goods
Trends and preferences
Population
Media and advertising
Expectations
Income
Define supply
The amount a producer is willing and able to sell at a particular price and time
State the law of supply
Refers to the positive relationship between price and quantity supplied. Firms will supply more at a higher price. If price rises, supply expands.
What are 5 non-price factors affecting supply?
Tommy still eats cat parts
Technology
Seasonal
Expectations of price levels in the future
Cost of resources (C,E,L,L)
Price of other goods
State paragraph for these examples:
The demand for apples after the price increases
Or
The demand for shoes after the price falls
As a result of rise/fall in price of……. from (state price change) demand contracts/expands. There is a movement up the demand curve.
State a paragraph for the examples:
the demand for pizza at Pizza Hut after Dominoes increases the price of their pizza.
Or
The demand for apple pies after a rise in price of ice cream
Or
State the demand for bananas after a media report stated that eating bananas helps with cancer.
As a result of (problem), there is an increase/decrease in demand for good/service (D to D1). There is a shift of the demand curve to the left/right. The non price factor is….
State paragraph example:
The supply of sharpeners after they increase the price
Or
The supply of apples after an decrease in price
As the price rose/fell from (prices) supply expands from (supply). Firms will supply more/less at a higher/lower price.
State the paragraph example:
The supply of pink pencil cases after a rise in price of purple pencil cases
Or
The supply of strawberries after winter ends
As a result of (problem), there is a increase/decrease in supply from (S to S1). There is a shift in the supply curve to the left/right. The non price factor is…..
Define equilibrium
Refers to the state of balance. In a market, equilibrium occurs where supply equals demand. This is shown in a diagram where the demand curve intersects the supply curve.
State a paragraph for this example:
The market for Nike shoes after adidas increases the price of their shoes
Or
The market for Nike socks after they half the price of Nike shoes
Or
The market for adidas shoes after a campaign with Kanye
Or
The market for adidas shoes after a friend tells you they’re good
Or
The market for Nike shoes after your income decreases
Or
The market for black and white Nike shoes after a big trend arises
Or
The market for Nike shoes after an increase in population
- Equilibrium occurs at Pe, Qe where D=S. There is no tendency to change
- Non price factor - demand
- Shortage/surplus exists as >
- Price rises/falls to eliminate the shortage/surplus
- Law of demand
- Law of supply
- Equilibrium is regained at pe1, qe1 at a higher price and quantity
State the 7 Step Process
Ellie never stops pangsais during sunroofs evenings
- Equilibrium occurs at Pe, Qe where D=S. There is no tendency to change
- Non price factor - supply or demand
- Shortage/surplus exists as >
- Price rises/falls to eliminate the shortage/surplus
- Law of demand
- Law of supply
- Equilibrium is regained at pe1, qe1 at a higher price and quantity
Define elasticity of demand
The responsiveness of quantity demand to a change in price of a good or service
State the elasticity demand equation
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