Unit 3- External Influences Flashcards
Demand
The amount of a good/service that customers are willing and able to buy at any given price.
Supply
The amount of a good/service that sellers are willing and able to sell at any given price.
Mark-up
The difference between the selling price of a good/service and the cost.
Equilibrium Price
The situation in a market where demand is equal to supply, E.G both parties are happy.
In theory, customers can buy what they want and shops have no unsold stock.
Price
The amount that a customer is willing and able to pay.
Cost
The amount spent by a business making/supplying/buying in the product.
Wealth
A value of assets.
Factors
Determinants
Tax
Money that is paid to the government, it is a compulsory financial charge.
Subsidies
Money (financial aid) or support granted by the government to help an industry, individual or business to typically remove some type of burden and often is in the overall interest of the public.
Elasticity of demand
It measures how sensitive or responsive quantity demanded is to a change in price, it measures how much demand changes when a price change occurs on essential/inessential products.
Inelastic demand
The quantity demanded is unresponsive/insensitive to change in price. It has a steep curve.
Elastic demand
The quantity demanded is sensitive/responsive to a change in price. It has a flatter curve.
Market forces
Factors of supply and demand, it also means the same as determinants of supply and demand.
Competition
Rivalry amongst sellers.
Market
Any situation where buyers and sellers are in contact in order to establish price.
Competitive market
A market in which there are a large number of sellers (many). Businesses in these markets compete mainly upon price. There is a range of prices, usually the lower end and products are usually good quality.
E.G farming + currency exchange services.
Monopoly
A market dominated by one seller (major). In reality, CMA describe it as any firm with more than 25% of the industries sales (market share). The prices are often high but the products are usually lower quality. E.G Tesco.
Economies of scale
Arise when unit costs fall as output rises, meaning it is cheaper to make one product.
Unit costs
The average cost per unit produced - how much it costs to make one product.
Oligopoly
A market structure that is not very competitive, they exists where a market is dominated by a few firms. The prices and products are similar so compete on non-price differences. E.G car manufacturers and television.
Monopolistic competition
A market structure with many competing firms each of whom supplies a slightly differentiated product. The prices are similar so compete on non-price differences like an oligopoly. E.G a taxi service or hairdresser.
Market size
Expressed as the collective value of the goods/services that buyers produce.
Market growth
The percentage change in the size of the market, measured over a specific period.
