The Market Economy

Derived Demand

Demand for a good for its use in production of other good

Composite Demand

Applies when goods have more than one use and demand leads to a prioritisation

Joint Demand

Consumed together (phone and phone charger)

Effective Demand

Willingness/ ability of consumers to buy g/s

Law of Demand

As the price falls the demand rises

Movement/shift of the demand curve

Change in demand at any given price

Movement along the demand curve

Change in price of good itself

Normal Good

Demand rises demand rises when income rises

Inferior good

Demand falls when income rises

Law of Supply

As price rises the quantity supplied will rise

Movement along supply curve

Price of the good itself

Movement/shift of the supply curve

Change in supply at any given price

Subsidy

Payment to a supplier that covers some of supplier’s production cost

Technological impact on market economy

Online shopping, advertising, access to information