1.2 Flashcards
(7 cards)
1
Q
demand curves
A
- price increases, quantity demand increases
- slope shifts right to left
2
Q
non price factors affecting demand
A
- price of other goods (substitutes) - increase , shift right
- advertising and branding
- changes to income
- changing demographics
- externl shocks
- seasonality
- changes in fashion and tastes
3
Q
non-price factors affecting supply
A
- changes in cost production
- new technology
- indirect taxes
- government subsidies
- external shocks
4
Q
price elasticity of demand
A
- increase in price, quantity demanded falls
- when price falls, demand increases
- > 1 elastic, demand more responsive to change in price
- > 1 demand is less responsive to change in price
5
Q
factors affecting PED
A
- brand loyalty
- availability of subsititutes
- proportion of income spent
- luxury or necessity
- time
6
Q
YED
A
- demand responds to changes in income
- a good with a positive yed is a normal good, luxury or necessity
- > 1 luxury demand rises when income rises
- 0-1 necessity not responsive
- < 1 inferior demand rises when income falls
7
Q
A
