Supply and Demand

Question 1

What is a market

Answer 1

a group of buyers and sellers of a particular good/service

Question 2

what are competitive markets

Answer 2

Markets with many buyers and sellers. Each has an insignificant impact on market prices eg coffee market, chains and independent coffee shops

Question 3

what is perfect competition

Answer 3

products are the same, there are many buyers and sellers, they don’t influence prices just take them as they are ‘price takers’

Question 4

what is monopoly

Answer 4

one seller who controls the price eg irish rail, magazines

Question 5

what is oligopoly

Answer 5

few sellers, not always aggressive competition eg air travel, supermarkets

Question 6

what is monopolistic competition

Answer 6

many sellers, slightly different products, each seller can set their own price eg restaurants, hairdressers, clothing

Question 7

which is the easiest type of competition to analyse

Answer 7

Perfect competition

Question 8

what is quantity demand

Answer 8

the amount of a good that buyers are willing and able to purchase

Question 9

what is the law of demand

Answer 9

the quantity demand falls when the price of the good rises

Question 10

price is always on what axis

Answer 10

y-axis

Question 11

quantity is always on what axis

Answer 11

x-axis

Question 12

what is the demand schedule

Answer 12

a table that shows the relationship between the price of the good and quantity demand

Question 13

what four things influence demand

Answer 13

income, prices of other goods and services, tastes and preferences, expectations

Question 14

what are normal goods

Answer 14

when your income increases, you’ll have more demand for these goods

Question 15

examples of normal goods

Answer 15

eating out, tesco’s finest

Question 16

what are inferior goods

Answer 16

when your income increases, you’ll have less demand for these products

Question 17

examples of inferior goods

Answer 17

pot noodles, public transport, tesco’s value range

Question 18

what are substitute goods

Answer 18

two goods for which an increase in the price of one leads to an increase in demand for the other

Question 19

examples of substitute goods

Answer 19

netflix and cinema tickets

Question 20

what are complementary goods

Answer 20

two goods for which an increase in price for one leads to a decrease in demand for the other

Question 21

examples of complementary products

Answer 21

cereal and milk// printers and toners

Question 22

difference between a movement and a shift along the demand curve

Answer 22

a movement is along the existing line, a shift moves the curve to the right or left depending on the circumstances

Question 23

shift to the right means

Answer 23

more demand

Question 24

shift to the left means

Answer 24

less demand

Question 25

reasons the demand curve may shift

Answer 25

change in consumer income, prices of related goods

Question 26

what is market demand

Answer 26

sum of all individual demand for a good/service

Question 27

as income increases, demand for a normal good will increase, how do we show this on a demand curve~

Answer 27

shifts to the right

Question 28

as income increases, demand for an inferior good will decrease, how do we show this on a demand curve~

Answer 28

shifts to the left

Question 29

why might a supply curve plateau

Answer 29

production constraints eg reached max amount of productivity

Question 30

what is supply schedule

Answer 30

a table that shows the relationships between the price of the good and the quantity supplied

Question 31

what is market supply

Answer 31

the sum of all individual producer supplies for a particular good/service

Question 32

what causes shifts in the supply curve

Answer 32

cost of production, prices of other goods, natural and social factors, input prices, number of sellers, expectations

Question 33

how would cost of production make a shift in the supply curve

Answer 33

eg advanced technology might increase productivity, meaning more can be produced for less inputs, the price may fall and the quantity supply is higher

Question 34

prices of other goods may shift supply curve how

Answer 34

flexibility of producers could allow them to switch to a more profitable business, eg from dairy to aerable farming

Question 35

examples of natural factors that could cause a shift in the supply curve

Answer 35

natural disasters, weather

Question 36

examples of social factors that could cause a shift in the supply curve

Answer 36

changing attitudes

Question 37

examples of inputs

Answer 37

labour, land, capital

Question 38

why might input prices cause a shift in the demand curve

Answer 38

if input prices rise, production becomes less profitable and firms may supply less of the good

Question 39

how might number of sellers affect the supply curve

Answer 39

entry and exit of firms into/out of the market can cause shifts

Question 40

what happens to the supply curve when there are lots of suppliers in the supply curve

Answer 40

it shifts to the right as there will be more supply

Question 41

what does expectations of production mean

Answer 41

what the supplier expects to be the future state of the market

Question 42

example of future expectations of the market and how it will affect the supply curve, how will firm react

Answer 42

if demand is expected to increase (shift to right), producers may invest in extra land/technologies to account for this in the future

Question 43

Once maximum possible supply is reached can quantity supplied increase

Answer 43

No

Question 44

What is fixed supply

Answer 44

When the supply of a product cannot be changed in the shirt run no matter the price eg perishable goods eg fish, concert ticket