test

Question 1

law of demand

Answer 1

as price goes up quantity demanded falls

causing negativley sloping demand curve

Question 2

state three main reasins for negative slope

Answer 2

income effect
substitution effect
diminishing marginal utility

Question 3

Explain the income effect

Answer 3

able buy > of a good
with set amount of money
if the price of that good falls

Question 4

What happens to purchaisng power when price of good rises

Answer 4

falls

Question 5

Whats purchasing power

Answer 5

amount of goods that can be bought with a pound

Question 6

Explain substitution effect

Answer 6

price for product falls so appears cheaper compared to other goods ceterius paribus

so people switch from buying expensive good to buying this cheaper one

therefore number of people demanding this good will increase

Question 7

define marginal

Answer 7

extra unit of something

Question 8

Explain diminishing marginal utlit

Answer 8

buy goods to satisf want for good

each suceedinggood bought will satify a littleless than the one previously

Question 9

when do you do movement along the curve

Answer 9

to do with the products price

Question 10

When do you shift curve

Answer 10

Population
Advertising
Seasonal
Income
Fashion/trends
Interest Rates
Complementary goods

Social and Emotional factors (e.g ethics)

Question 11

wHAT RELATIONSHIP DOES SUPPLY CURVE SHOW

Answer 11

relationship betweent
amount of good supplied
and price 4 good @ each quantity

Question 12

Who/what is supply curve determined by

Answer 12

producers descisions

Question 13

Why does supply curve have a positrive slopw

Answer 13

hihger price good sells at : the more willing a firm is to produce that good

therefore QS increases with rising prices as producers incentivised to produce more

Question 14

When do you do movements along the supply curve

Answer 14

for each quantity supplied there isa different price

Question 15

When do you shift supply curve

Answer 15

there’s a change in quantity supplied at each price level level

Question 16

Why do you shift supply curve

Answer 16

Productivity
Indirect taxes
Number of firms
Technology 
Subsidies 
Weather conditions
Cost of production

Question 17

What does productivity do and how

Answer 17

shift supply outwards

able to make more products in less time

Question 18

What does indirect taxes do and hiw

Answer 18

shift inwards

as costs increase

Question 19

What does numebr fo firms do and how

Answer 19

increasing - shift supply outwards

increase market supply

Question 20

What does tech do

Answer 20

shift outwards
as more efficient production @EACH LEVEL
as more output produced lower UC as makes more with the same FC

Question 21

What do subsidies do

Answer 21

outward shift of supply

as casues cost to go down or this money can be used to invest in capital

Question 22

What does weather do

Answer 22

shift supply outwards

increases supply especially in agriculture

Question 23

What does cost of production do

Answer 23

lower uc - shift out - as bs supply more at each price

higher uc - shift in - bs makes less at each price

Question 24

What does fall in exchange rate do

Answer 24

makes imports more expensive - imported components &raw materials

Question 25

define PES

Answer 25

measures repsonsivness of QS to a change in price

Question 26

What can elasticity of supply be thought of as

Answer 26

sensitivity of supply or responsiveness of supply

Question 27

Whose behaviour does Elasticity of supply look @

Answer 27

producers

Question 28

If price of a good rises what are bs likely ot do

and but what does elasticity of supply do

Answer 28

supply more of good

measures how much supply will change by

Question 29

What does an INELASTIC PES mean

Answer 29

bs unlikely to change quantity supplied by big amount if price for it changes

Question 30

What does ELASTIC PES

Answer 30

bs likely to change quantity supplied by a large amount if price changes

Question 31

STATE EQUATION

Answer 31

%change in price / %change in quantity supplied

Question 32

PES = 1 what does this mean

Answer 32

change in price has exact same change in quantity

Question 33

what is the PES of perfectly inelastic

Answer 33

0

Question 34

What does PES 0 MEAN

Answer 34

INELASTIC

QS wont change with a change in price

Question 35

What does perfectly elastic have a PES of

Answer 35

infinity

Question 36

What does perfectly elastic PES mea

Answer 36

quantity can change w/o change in price

Question 37

FActors affectin Elasticity of Supply

Answer 37

spare capacity