social science second quarter
Demand - consumer side of the market
Purchases - considered as money votes
Law of demand - general behavior of consumers
Ceteris paribus - assuming all other things are constant
Clearance sale - traders would sell products at a reduced price
Demand schedule - table
Demand curve - graphical presentation
Individual demand - demand by a single buyer
Market demand - demand of all consumers
Canvassing prices - buyer is able to compare prices
Utility theory - use of the product determines its real worth
Marginal utility - satisfaction derived from a product consumed
Util - hypothetical unit
Change in quantity demanded - price is the only determinant of demand
Change in demand - price is constant but demand changes
Factors affecting demand
Change in income - more income means greater capacity to meet economic wants
Population - more people means more goods and services
Advertisement - most influential
Change in the price of substitute products - alternatives for each other
Change in the price of complementary products - products used together
Speculation - occurs when consumers anticipate that the price will suddenly increase or supply will run out
Supply of goods and services
Supply - sellers side of the market
Productivity and cost of production - factors that affect supply
Cost of production - factor that affect supply and business profit
Supplier - seller of the product
Supplies - either wholesale or retailers
Wholesale - bulk
Retailers - buy from wholesalers and sell to consumers
Law of supply - earn more profit = why sellers prefer a high price
Supply schedule - table
Supply curve - graphical representation
Individual supply - single seller
Market supply - two or more seller
Upward slope - indicates the positive or directly proportional relationship between the price and the quantity supplied
Change in quantity supplied - change due to price
Change in supply - supply changes but price is constant
Productivity - measured by comparing the number of outputs produced - brings down the cost of production
Marginal cost - increment in total cost
Break Even point - profit is zero
Diminishing returns - exact opposite of the concept of productivity
Total revenue - total product multiplied by the unit price
Cost - refers to the expenditures
Demand and supply interaction
Price - market value of a commodity - amount a buyer pays a seller - links buyers and sellers
Market price - acceptable to both buyers and sellers
Important of price
Fair
Free
Elastic
Cost-free
Efficient
Market - impersonal economic entity that represents the interests of the buyers and sellers
Market surplus - quantity supplied is greater than the quantity demanded
Market shortage - quantity supplied is less than the quantity demanded
Equilibrium - quantity supplied and quantity demanded is equal
Law of demand and supply - determines the market price
Deflation - decline in the prices of goods and services
Recession - at least two consecutive quarters of economic growth
Inflation - increase in the level of price of goods and services
Demand pull inflation - caused by excessive demand that supply cannot meet
Cost-push inflation - increase cost of production
Creeping inflation - three percent or less
Walking inflation - three to ten percent
Galloping inflation - ten percent or more
Hyperinflation - fifty percent or more
Elasticity - measures the degree of responsiveness of quantity demanded or supplied
Price ceiling - highest allowable price of a product
Price floor - opposite of price ceiling
Daily minimum wage - lowest salary a day