Demand and Supply

Flashcards about demand and supply determinants, curves, elasticity, and state interventions.

Determinants of Demand

Factors that influence demand: Needs, consumer desires, expectations, income.

Normal Goods

Demand increases with rising income (e.g., Forion).

Inferior Goods

Demand decreases with rising income (e.g., bottled water).

Substitutes

Price decrease in one good lowers the demand for the other good (e.g., butter, margarine).

Complementary Goods

Price decrease in one good increases the demand for the other good (e.g., gasoline, cars).

Ceteris Paribus

The assumption that only one factor changes at a time.

Demand Curve

Graphical representation of the relationship between price and quantity demanded.

Law of Demand

The quantity demanded of a good generally increases as its price decreases, and vice versa.

Price Change

Change in price; movement along the demand curve.

Exogenous Factors

Factors other than price that shift the demand curve.

Nutzeneinschätzung

Assessment of utility.

Preise von Substitutionsgüter

Prices of substitute goods.

Preise von Komplementärgütern

Prices of complementary goods.

Erwartete Preisveränderung

Expected price changes.

Gossen

Founder of marginal utility theory.

Gossen's Considerations

People have more needs than they can satisfy with their income.

First Gossen's Law

At increasing satisfaction of needs the marginal utility of each additional unit decreases.

Second Gossen's Law

Maximum need satisfaction is achieved when the marginal utility of all goods is equal.

Nachfragekurve

Curve that indicates what quantity the demand side is willing to demand at different prices.

Angebotskurve

Curve that indicates what quantity the supplier is willing to sell at different prices.

Kostenverlauf

Costs increase with increasing production.

Gesetz vom abnehmenden Grenzertrag

If the input of one production factor is increased, the output will initially increase at an increasing rate, then at a decreasing rate, and finally decrease.

Angebotskurve

The supply curve corresponds to the increasing part of the marginal cost curve.

Gewinnmaximierung

As long as marginal utility under 400 CHF the product will produced.

Gewinnmaximierung

Profit maximization means price equals marginal costs.

Preisveränderung

Change in price; movement along the supply curve.

Exogener Faktor

Costs of factors, production progress, external influences, government measures, expected price changes.

Nachfrageelastizität Fragestellung

The question of "how strongly" the demand reacts to price changes.

Definition of Nachfrageelastizität

Percentage change in quantity demanded divided by percentage change in price.

Prüselastische Nachfrage

Price change of 10% leads to a quantity change of more than 10% (e.g., butter).

Preisunelastische Nachfrage

Price change of 10% leads to a quantity change of less than 10% (e.g., gasoline).

Einheits elastische Nachfrage

Price change of +/- 10% leads to a quantity change of exactly +/- 10%.

Vollkommen unelastische Nachfragekurve

Price has no effect on demand (e.g., travel pass, highway vignette).

Vollkommen elastische Nachfragekurve

A price change alone does not lead to a change in demand.

Die Neigung zeigt die Elastizität der Nachfrage

Slope shows the elasticity of demand.

Wichtigkeit/Dringlichkeit

Unimportant: more elastic. Important: more inelastic.

Substitutions möglichkeite

More substitutes: more elastic. Fewer substitutes: more inelastic.

Ausgaben gemessen am Haushaltsbudget

The less the expenses more inelastic - the more the expenses more elastic

Nachfrage elastizität

Price increase lead to a quantity change.

Einkommens elastizität

The measure of how much the quantity demanded of a good responds to a change in consumers' income

Angebotselastizität

Measure of how much the quantity supplied of a good responds to a change in the price of that good.

Bestimmungsgründe

Ability to mobilize resources, Storage capability of products, Flexibility of production, Time horizon

Spekulation

Why would Vuitton produce a limited stock so it becomes a speculation e.g. Gold

Staatliche Eingriffe in den Markt

State interventions into the market

Nicht Marktkonforme Eingriffe

Price ceilings and price floors

Mindestpreise

Results in a surplus

Hichstpreis

Results in less demand

Messung der Effizienz

The effciency measuring of state interventions

Rente

Difference between willingness and market price

Wohlfahrtsverluste durch staatliche Markteingriffe

Economic welfare loss because of state interventions