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business year 1 > 1.2 market > Flashcards

1.2 market Flashcards

1
Q

What is demand?

A

Refers to the number of goods/services customers are willing to buy at a given price

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2
Q

What is the relationship between quantity demanded and price

A

Inverse

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3
Q

What factors lead to a change in demand?

A

Price of other goods
Advertising
Income
Seasonality
Tastes
Shocks

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4
Q

What way does the demand shift in an increase in demand?

A

Right

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5
Q

What is supply?

A

The number of goods/services businesses are willing to sell at a given price in a specific time period

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6
Q

What is the relationship with supply and price?

A

Direct

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7
Q

What factors lead to a change in price ?

A

Changes in cost of production
New technology
Government subsidies
Indirect taxes
External Shocks

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8
Q

What happens to the demand curve when there is a rise in demand?

A

Shifts to the right as demand exceeds supply

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9
Q

What happens to the demand curve when there is a fall in demand?

A

Shifts to left as supply exceeds demand

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10
Q

What happens to the supply curve when there is a rise in supply?

A

Shifts to right as supply exceeds demand

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11
Q

What happens to the supply curve when there is a rise in supply?

A

Shifts to the left as demand exceeds the supply

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12
Q

What is the price elasticity of demand ?

A

This is how responsive the change in quantity demanded will be to a change in price

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13
Q

How do you calculate P.E.D?

A

% change in quantity demanded /
% change in price

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14
Q

What does >1 mean for PED?

A

The good is elastic so demand is more reponsive to a change in price eg a luxury good (cars, holidays, brands)

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15
Q

What does PED mean when it is between 0&1

A

Demand is less responsive to a change in price so the good is inelastic for necessisties (bread, milk, rent)

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16
Q

What factors influence the PED?

A

Brand loyalty
Time
Availability of substitutues
Proportion of income spent
Luxury or necessity

17
Q

What is the income elasticity of demand?

A

How responsive the change in quanitity demanded is to a change in income

18
Q

how do you work YED?

A

%change in quantity demanded/ % change in income

19
Q

What is a good with a +yed ?

A

Normal goods - necessities or luxuries

20
Q

What is a good with a -yed?

A

Inferior good (unbranded goods, public transport)

21
Q

What factors influence YED?

A

Recession where wages fall so demand for inferior rises
Wage legislation
Taxation
International trade

22
Q

What is the signifance of YED to business?

A

Production planning
- resources needed
Product planning

business year 1 (10 decks)

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