Economics Unit 1 - The allocation of resources in a free market 0.0 / 5 ? EconomicsResource allocationASAQA Created by: anna_richardsCreated on: 24-02-16 12:24 What is the definition of demand? The amount that a consumer is willing and able to buy at a given price 1 of 20 What are the factors that affect demand? (PASIFC) Population, Advertising, Substitute, Income, Fashion, Compliment 2 of 20 What causes a movement along the demand curve? Change in price 3 of 20 What is derived demand? The demand for one good leads to the demand for another 4 of 20 What is composite demand? The demand for one good ha more than one use 5 of 20 What is the definition of supply? The amount that a producer is willing and able to provide at a given price 6 of 20 What are the factors that affect supply? (PINTWC) Productivity, Indirect tax, Number of firms, Technology, Weather, Cost of production 7 of 20 What causes a movement along the supply curve? A change in price 8 of 20 What is joint supply? The production of one good results in the production of another 9 of 20 What is elasticity? Measures the responsiveness of demand/supply to a change in something 10 of 20 What is the equation for price elasticity of demand? (PED) % change in Q.D/ % change in P 11 of 20 What is the equation for income elasticity of demand? (YED) % change in Q.D/ % change in Y 12 of 20 How can you tell if a good is normal or inferior? A normal good has a + YED. An inferior has a - YED 13 of 20 What is the equation for cross price elasticity of demand? (XED) % change in Q.D of good A/ % change in P of good B 14 of 20 How can you tell if a good is a substitute or a compliment? A substitute has a + XED. A compliment has a - XED. 15 of 20 What is the equation for price elasticity of supply? (PES) % change in Q.S/ % change in P 16 of 20 Where does market equilibrium occur? Supply = Demand 17 of 20 If there is excess demand, does price sit above or below the equilibrium point? Below 18 of 20 If there is excess supply, does price sit above or below the equilibrium point? Above 19 of 20 What are the three main stages of the price mechanism? (SIR) Signal, Incentive, Ration 20 of 20
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