supply and demand EWA

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  • Created by: Austeja0
  • Created on: 22-11-20 16:27
what is demand?
the amount of a product that consumers are willing and able to purchase at any given price.
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how is the demand curve shown?
it always slopes downwards
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what is the law of demand ?
The higher the price, the lower the quantity demanded

The lower the price, the higher the quantity demanded
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what is supply?
is the amount of a product which suppliers will offer to the market at a given price.
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law of supply
when the price is high supply will increase
when the price is low supply decrease
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what is equilibrium?
balance between market demand and supply
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what factors influence demand?
-income
-weather
-advertising
-change in preference
-legislation
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explain shifts in demand
A change in price moves demand or supply along the curve, any other factor will result in a shift of the curve.
-an increase in demand shifts the curve will shift outwards (right)
-a decrease in demand shifts the curve will shift inwards(left)
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explain shifts in supply
-an increase in supply shifts the curve outwards (right)
-a decrease in supply shifts the curve inwards(left)
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what are the factors affecting supply?
-costs
-weather
-technology
-legislation
-change in the number of producers
-change in supply of a related good
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what is elasticity?
Elasticity refers to the responsiveness of one economic variable, such as quantity demanded, to a change in another variable, such as price.
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what's the importance of elasticity?
-helps entrepreneurs know whether they should increase their price or not
-Influences the behavior of a firm
-Relationship between changes in price and total revenue
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equation for price elasticity of demand
%change in quantity demanded
------------------------------
%change in price
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what is the equation for %change in price or change in quantity
change in figure
------------------- x 100
original figure
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what is price elastic?
-where a change in price causes a greater proportionate change in demand
-PED coefficient is more than 1.0
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what is price inelastic?
-where a change in price causes a smaller proportionate change in demand
-PED coefficient is less than 1.0
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what are examples of inelastic and elastic goods?
inelastic: necessities such as water, power, petrol, basic foods or addictive goods
elastic: goods that have lots of substitutes and in a very competitive market, such as bread, cereals, chocolate bars
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what are the factors that influence elasticity?
-customer knowledge
-brand loyalty
-availability of substitute products
-ability to switch to other products
-uniqueness of the product
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Other cards in this set

Card 2

Front

how is the demand curve shown?

Back

it always slopes downwards

Card 3

Front

what is the law of demand ?

Back

Preview of the front of card 3

Card 4

Front

what is supply?

Back

Preview of the front of card 4

Card 5

Front

law of supply

Back

Preview of the front of card 5
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