3.1.2.1 THE DETERMINANTS OF THE DEMAND FOR GOODS AND SERVICES
Studied by 0 people
Call Kai
Learn
Practice Test
Spaced Repetition
Match
Flashcards
Knowt Play1/42
There's no tags or description
Looks like no tags are added yet.
Name | Mastery | Learn | Test | Matching | Spaced |
|---|
No study sessions yet.
43 Terms
Define a market
A voluntary meeting of buyers and sellers in which exchange takes places
For example, e-commerce (Amazon)
Define demand
The quantity of a good or service that consumers are willing and able to purchase at different prices over a given period of time
Define supply
The quantity of a good or service that prorogues are willing and able to offer for sale at different prices over over a given period of time
Define competitive markets
Markets where prices are determined by supply and demand
Define rulling market price/equilibrium price
The current price at which a good or service is bought or sold in the market
Planned demand = Planned supply
What is derived demand?
The demand for a good or service that arises from the demand for another related good or service (a substitute)
Define effective demand
The desire to buy a good or service as well as the ability and willingness tp pay for it
State different types of markets
physical/online markets
geographical (local, regional, national, international)
ownership (private, public, mixed)
based on nature of goods - consumer, capital
high street, Sandbach market
What is a competitive market?
where buyers and sellers trade goods and services
prices are determined by supply and demand
What is the link of competitive markets and the ruling market price?
The ruling market price is the current price at which a good or service is traded in the market
What does the demand curve show?
How much consumers are willing and able to buy at different prices
What are the 2 axis of the demand curve?
price
quantity
Explain what the demand curve shows
As prices decrease, quantity increase
What is individual demand?
- one customers demands the good or service
What is market demand?
- demanded by all the consumers in the market
How to find market demand?
Adding up all individual demands at each price levels
How is a change of price shown on the demand curve?
Movement along the demand curve
What do you assume using the demand curve?
Assume they all other variables are unchanged
What is this called In latin?
Ceteris paribus - other things being equal
Which one is the independent variable?
The price
What does it mean when the demand curve shift outwards?
Price and quantity increase
What does it mean when the demand curve shift inwards?
Price and quality decreases
What does it mean if the arrow points down?
Extension
What does it mean if the arrow points upwards?
Contraction
Does the demand curve have a negative or a positive relationship?
Negative
What does quantity mean?
The quantity is how much one consumer is demanding
What is a substitute good?
Goods or services that can replace each other in satisfying the same need or want
Different brands of the same product
What is a complimentary good?
Products that are consumed together because the increase in demand in one, increases the other (toothpaste and toothbrush)
What is an increase in demand?
At every possible price - consumers are willing and able to purchase more of good or service than before
What is decrease in demand?
At every possible price - consumers are willing and able to purchase less of a good and service than before
What are 5 examples of variables that cause the demand curve to shift outwards?
Substitute goods
Complimentary goods
Persons disposable income
Successful advertising campaign
Increasing population size
What is it called where price meets quantity?
Equilibrium - where the exchange takes place
What else can we say at equilibrium?
Where the market completes
What is a normal good?
Demand increases as consumers income rises
What is an inferior good?
Demand for goods decreases as a consumers income income rises
What is the letter used for income?
Y
What is an example of an inferior good?
Super market brands
What happens when income increases for a normal good?
Increases - shift outwards
What happens when income increases for an inferior good?
Decrease - shift inwards
What do you always do with a diagram?
ACE
What does ACE stand for involving a demand curve?
A - label axis
C - label curve
E - equilibrium
What is an example of a direct tax?
Income tax
What is an example of indirect tax?
VAT - tax on spending
Note 
Flashcards (74)