The amount of a product which suppliers will offer to the market at any given price at a particular price.
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What is the definition of demand?
Demand for a good is the quantity of goods or services that will be bought over a period of time at any given price.
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What is the definition of PED?
PED measures the responsiveness of demand to a change in price.
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What is the definition of YED?
YED measures the responsiveness of demand to a change in income.
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What is the definition of a Inferior good?
They are goods that generally decrease in demand when income rises - for example bus travel.
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What is the definition of a Normal good?
Goods that generally increase in demand when income rises -for example, chocolate bars.
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What is the definition of XED?
XED measures the responsiveness of demand of good A, to a change in price of good B.
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What is the definition of PES?
PES measures the responsiveness of supply to a change in price.
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Define 'Signalling'
Prices help to determine where and how resources should be allocated.
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Define 'Incentive'
Prices create encouragement for economic agents to behave and make decisions in ways consistent with supply and demand.
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Define 'Rationing'
Resources are scarce and finite, so ot everyone is able to buy everything they want. when demand is greater than supply, price risesso the good or service is rationed to those who can afford it.
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Define 'Direct Tax'
A tax levied directly on an individual or organisation. e.g. income tax
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Define 'Indirect Tax'
A tax levied on a good or service e.g. VAT
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Define 'Ad Valorem Tax'
A tax levied as a percentage of the value of the good. e.g. VAT (20%)
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Define 'Specific/Unit Tax'
A tax levied on volume. e.g. Excise Duty - levied on Alcohol, Tobacco, and petrol. Does not change when price does.
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Define Incidence of Tax
The tax burden on the tax payer.
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Define Subsidy
sum of money granted by the government to help a business keep the price of a good lower
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Define Habitual Behaviour
People sticking with what they know e.g. food shopping or banking
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Define Herding Behaviour
People are affected by the actions of the friends/group they are with. e.g. smoking or house prices
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Define Impulsive Behaviour
A sudden want for a product usually brought about by things like chocolate bars at checkouts.
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Define Altruistic Decisions
Doing something when there is no benefit to you e.g. donating to a food bank
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Define Consumer Weakness at computation
People don't always fully understand how much utility they will recieve from something because it can be hard to calculate e.g. bad meal at resturant
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Define Insufficient Information
We often don't have all the information e.g. new products
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Other cards in this set
Card 2
Front
What is the definition of demand?
Back
Demand for a good is the quantity of goods or services that will be bought over a period of time at any given price.
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