the quantity that consumers are willing and able to buy at a given price in a given period of time
2 of 20
what is a demand curve?
the amounts (quantity) demanded of a product in the market at different price points
3 of 20
what is the basic law of demand?
demand varies inversely with price - lower prices make products more affordable for consumers
4 of 20
what is supply?
the quantity of a good or service that a producer is willing and able to supply onto the market at a given price in a given time period
5 of 20
what is the basic law of supply?
as the selling price of a product rises, so businesses expand supply to the market
6 of 20
what are the main causes of changes in the amount supplied to a market?
costs of production
external shocks
new technology
taxation & government subsidies
7 of 20
what is a supply curve?
a line (or curve) that shows the different combinations of quantity supplied and market price. normally upward-sloping - i.e. higher quantities are supplied as the market price rises
8 of 20
what is market equilibrium?
when there is a balance between demand and supply in a market
9 of 20
what is market demand?
the total quantity (volume) demanded for a product in a market by all customers
10 of 20
what is market supply?
the total quantity (volume) of a product supplied to a market by suppliers
11 of 20
how is the PED calculated?
% change in quantity demanded
/
% change in price
12 of 20
what does it mean if the PED is more than 1?
price elastic
13 of 20
what does it mean if the PED is less than 1?
price inelastic
14 of 20
what does it mean if the PED is exactly 1?
unitary price elasticity
15 of 20
what are some factors that effect PED?
brand strength
necessity
habit
availability of substitutes
time
luxury goods
16 of 20
how do you calculate the income elasticity of demand?
% change in quantity demanded
/
% change in income
17 of 20
YED >1 means that?
luxury product
18 of 20
YED between 0 and 1 means that?
necessity product
19 of 20
YED <0 means that?
inferior product
20 of 20
Other cards in this set
Card 2
Front
what is demand?
Back
the quantity that consumers are willing and able to buy at a given price in a given period of time
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