1.2 Flashcards
(20 cards)
What is demand?
The amount of goods or services that a consumer is willing and able to buy at a given price over a period of time.
What is a substitute product?
A product that acts as an alternative to another good, creating competition.
What happens to the demand for good B if the price of good A increases?
The demand for good B will increase.
What are complementary goods?
Goods that are bought alongside each other, such as fish and chips.
What effect does an increase in the price of good A have on the demand for good B if they are complementary goods?
The demand for good B will decrease.
Define disposable income.
Income after taxes, e.g., take-home pay.
Define discretionary income.
Income remaining after all necessary payments have been made.
What is advertising?
A promotional method that involves the use of media to communicate with existing and potential consumers.
What is branding?
A promotional method that involves the creation of an identity for the business that distinguishes the firm and its products.
What are external shocks?
Unexpected events outside of a business’s control that impact demand or supply.
What is seasonality in the market?
A market that experiences peaks and troughs in terms of sales volume based on the time of year.
What is supply?
The amount of goods or services that a business is willing and able to sell at a given price over a period of time.
What are costs of production?
Expenditure incurred by a business when producing goods or services from factor inputs.
What are indirect taxes?
Charges placed on goods and services produced by individuals and firms, e.g., VAT.
What are government subsidies?
Financial assistance given to individuals, firms, and industries to provide a good or service.
What is equilibrium in a market?
Where demand for a product is equal to the supply of that product (D = S).
Define price elasticity of demand.
A measure of the responsiveness of demand to a change in price.
How is price elasticity of demand calculated?
Calculated as: % change in quantity demanded / % change in price.
What is total revenue?
The total amount of money coming into a business from the sale of goods or services.
How is total revenue calculated?
Calculated as: Selling price x quantity sold.
