Week 5

Question 1

Why do shifts in demand happen?

Answer 1

Uncontrollable factors - affects demand and is out of company control e.g weather, interest rates

Controllable factors - affects demand but can be controlled by company e.g advertising, product quality

Question 1

Supply curves definition

Answer 1

graphical representations of the relationship between the price of a good or service and the quantity of that good or service that producers are willing and able to supply in a given time period.

Question 2

Why do supply curves slope upwards?

Answer 2

Law of Supply, which states that as the price of a good increases, the quantity supplied by producers also increases, and as the price decreases, the quantity supplied decreases.

Question 3

Market equilibrium definition

Answer 3

The price at which quantity supplied equals quantity demanded

Question 4

Market clearing price

Answer 4

also known as the equilibrium price, is the price at which the quantity of a good or service supplied equals the quantity demanded. At this price, there is no surplus or shortage in the market

Question 5

Price taker definition

Answer 5

firm or individual that cannot influence the market price of a good or service and must accept the price determined by supply and demand in the market

Question 6

Price setter

Answer 6

a firm or individual that has the ability to influence or set the price of a good or service in the market