Theme 1 Section 2- The Market Flashcards
Supply and Demand
Demand to be high and supply needs to keep up with demand.
Effective demand
Quantity of a product that consumers want/buy at any given price at a particular time.
Supply
Quantity of a product that suppliers are willing/able to supply at a particular time.
Equilibrium price
Buyers demand the same quantity sellers supply known as, market clearing price.
Surplus when price of product increases
Movement right along supply curve and left along demand curve.
Qd less than Qs, excess apply.
Shortage when price decreases
Movement long left supply curve and right along demand curve.
More demand than supply, excess demand
Demand factors
Substitutes, demand for a particular brand/type.Cost of rubber increases, demand for tyres rise.
Complementary products
Ink cartridges and printers. Price of printers increase
Demand for printers fall so ink falls.
Consumer income
Higher income more expensive products, fall in income increases cheaper goods
Consumer tastes
High sugar foods leads to a change in consumer diets, fall in demand for sugary drinks, increase for healthier drinks.
Advertising and branding
Increase demand for a product or for existing consumers to be loyal ,repeatedly purchasing.
Seasonal changes
Increase in demand for gas for central heating in winter. Summer increase in fans.
External shocks
Threat of war, diseases and extreme weather. Risk of flooding, demand for sandbags to protect homes.
Supply affected factors
Cost of production, profit from selling at given price, decreases if cop increases.
Indirect taxes
Good or service increases, effects the cost for producer, reduces supply.
