Introducing the market
- Created by: ashleighclifford
- Created on: 29-03-19 14:01
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- Introducing the Market
- Demand
- Effective demand
- Quantity consumers are willing & able to buy at the current market price
- Individual demand
- Demand of an individual or firm, measured by the quantity bought at certain price at 1 point in time
- Market demand
- Sum of all individual demands in a market
- Varies with price
- Lower = more affordable good & consumer demand increases
- IRACISTPop
- Interest Rates
- Advertising
- Complementary
- Income
- Substitutes
- Tastes
- Population
- Effective demand
- Supply
- Individual supply
- supply a producer is willing & able to sell at a given period of time
- Market supply
- Sum of all individual supplies in the market
- Types:
- Joint Supply
- When increasing supply of 1 good causes an increase or decrease of supply of another good
- Composite Supply
- This occurs when good or service can be obtained from different sources
- Competitive Supply
- If raw materials producing good in composite supply are perfect substitutes of each, the sources of supply are in competition to satisfy particular need or want
- Joint Supply
- Supply curves are upward sloping because
- If price increases, it's more profitable for firms to supply the good, so supply increases
- High prices encourage new firms to enter the market, because it seems profitable, so supply increases
- With larger outputs, firm's costs increase, so they need to charge a higher price to cover the costs
- PINTSWC
- Productivity
- Indirect taxes
- Number of firms
- Technology
- Subsidies
- Weather
- Costs of production
- Individual supply
- Price determination
- Equilibrium price & quantity & how they're demanded
- When supply meets demand
- At market equilibrium, price has no tendency to change & is known as market clearing price
- When supply meets demand
- Excess demand
- There's shortage in the market - pushes price up, causes firms to supply more
- Since prices increase, demand will contract
- There's shortage in the market - pushes price up, causes firms to supply more
- Excess supply
- Untitled
- Equilibrium price & quantity & how they're demanded
- Demand
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