lesson 7 Flashcards
what does the demand curve show?
what happens to the quantity demanded when price changes and there is no change in any other factors influencing demand
factors that influence demand
- income
- fashion of the product
- taste of consumer
contraction of demand is caused by…
a rise in price
extension of demand is caused by…
a decrease in price
what is consumer surplus?
the extra amount that consumers would pay above what they actually pay
people pay less for a product than they are willing to
what is producer surplus?
the minimum prices a firm is willing to sell their profit at
if demand curve shifts to the right what does it mean?
demand has increased
if demand curve shifts to the right what does it mean?
demand has increased
if demand curve shifts to the left what does it mean?
demand has decreased
Causes for change in demand
- Change in income
- Changes in the price of alternative goods
- Changes in the price of complements
- Changes in taste or fashion
- Successful advertising campaigns
- Changes in population size and age distribution
A rise in price causes what to happen to supply?
An extension
A fall in price cause what to happen to supply?
A contraction
Causes of changes in supply
- Changes in the costs of production
- Changes in productivity
- Advances in technology
- Indirect taxes
- Subsidies
- Changes in the price of other goods
What is demand?
Consumer willingness and ability to buy something
When does equilibrium occur?
Demand=supply
