THE PRICE THEORY Flashcards
The price theory is the interdependence between ?
supply, demand and price
Define price.
the monetary value that the consumer is prepared to pay for it and what the manufacturer is prepared to sell it.
Explain what the equilibrium price is.
this is the point at which both the consumer and manufacturer are satisfied .
Explain the relationship with supply and demand.
if demand increases and supply stays the same price will increase vice versa if the demand for a product decreases and supply remains the same price will deacrease.
What three things are demand measured by?
The consumers need for the product.
If the consumer can afford the product.
If the consumer is willing to pay for the product.
What two things are demand related to?
time and price, meaning the demand for a specific product at a specific time can change the price
What does the demand curve illustrate?
the relationship between demand and price.
