The amount of a product that consumers are willing and able to purchase at any given rate.
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Factors leading to a change in demand
Price of substitutes; Adverts and Branding; Price of complements; Demographics; Change in consumer incomes; External Shocks; Fashion, Taste and Preferences; Seasonality
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Supply
The quantity of a product that firms are willing to supply at any given price level in a given time period.
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Which way does the Demand Curve slope?
Downwards from left to right.
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Factors leading to a change in supply
The cost of production; New Technology; Indirect taxes such as VAT; External Shocks.
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Equilibrium
A state of equality between market demand and market supply.
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Diequilibrium
Prices where supply and demand are out of balance.
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Surplus
When supply exceeds demand.
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Shortage
When demand exceeds supply.
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Which way does the Supply Curve slope?
Upwards from left to right.
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Price Elasticity of Demand (PED)
The measure of how responsive demand is to a change in price.
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Formula of PED
%Change in quantity demanded/ %Change in price
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Values of Price Elasticity
(-)1+ is elastic. If the number is smaller than 1 it's inelastic.
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Price Elastic Demand
Demand is sensitive to price changes.
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Price Inelastic Demand
Demand is not so sensitive to price changes.
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Other cards in this set
Card 2
Front
Price of substitutes; Adverts and Branding; Price of complements; Demographics; Change in consumer incomes; External Shocks; Fashion, Taste and Preferences; Seasonality
Back
Factors leading to a change in demand
Card 3
Front
The quantity of a product that firms are willing to supply at any given price level in a given time period.
Back
Card 4
Front
Downwards from left to right.
Back
Card 5
Front
The cost of production; New Technology; Indirect taxes such as VAT; External Shocks.
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