The Market Flashcards
What is demand?
Demand for a good or service is the quantity that customers are willing and able to buy at a given price in a given period of time.
What are the causes for changes in demand?
Price, incomes, fashion & tastes & preferences, advertising & branding, external shocks, seasonal factors
What is a demand curve?
The amounts (quantity) demanded of a product in the market at different price points
What is supply?
Supply is the amount of a good or service that producers are willing and able to sell at any given price
What are the causes of changes in market supply?
Costs of production, external shocks, new technology, indirect taxation, subsidies
What is a supply curve?
A Line (or curve) that shows the different combinations of quantity supplied and market price. Normally upward sloping.
What is price elasticity of demand?
Price Elascity of demand measures the extent to which the quantity of a product demanded is affected by by a change in price
What is the formula for PED?
PED = % change In Quantity demanded / change in price
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