Demand and Supply

Question 1

Types of Markets

Answer 1

• Labour Market
• Products Market
• Factors Market
• On-line Market
• Financial Market
• Stock Market
• International Currency Market
• Marraige Market

Question 2

Demand

Answer 2

The ability and willingness to buy a quantity of a good and service at a certain price in a given time period.

Question 3

Law of Demand

Answer 3

As the price of the good falls, the quantity demanded will usually increase, ceteris paribus.

Question 4

The income effect

Answer 4

When prices drop, concumers will have an increase in their real income, therefore the people will be likely to buy more of the product.

Question 5

Subsitution effect

Answer 5

When the price falls, then the product will be relatively more attractivr than other products, whose prices have stayed unchanged, concuming more of the product, substituting it for products that were previously purchaced.

Question 6

Shift in the demand Curve

Answer 6

Something besides price has changed causing the demand curve to shift out or inwards, these include non-price determinents.

Question 7

Non-price Determinents

Answer 7

• Concumer Taste
• Number of buyers (size and structure of the population
• Price of Related Goods (Substitutes & Compliments)
• Comcumer Income (Normal good & Inferor good)
• Expectations

Question 8

Complements

Answer 8

Products that are often pruchased together. Achange in the price of one product will lead to a change in the demand for the other product.

Question 9

Normal goods

Answer 9

Goods that increase in demand when the income rises

Question 10

Inferior goods

Answer 10

Goods that when the income rises the demand falls.

Question 11

Exception to the Law of Demand

Answer 11

Velben goods (Branded/ Status goods)

As the price rises, the demand increases

Question 12

Graph representing the relationship between the quantity demanded for velben goods and the price of the product.

Answer 12

Question 13

Supply

Answer 13

The ability and willingness of producers to produce a quantity of a good and service at a given price in a given time period.

Question 14

The Law of Supply

Answer 14

As the price of a product rises, the quantity supplied of the product will usually increase, ceteris paribus.

Question 15

Movement along the supply curve

Answer 15

Due to a change in price

Question 16

Shift along the supply curve

Answer 16

Due to non-price determinents of supply

Question 17

Non-Price determinents of Supply

Answer 17

• Technology
• Prices of other products
• Resources
• Number of sellers
• Taxes&subsidies
• Expectations

Question 18

Ceteris paribus

Answer 18

all other things being equal

Question 19

Effective Demand

Answer 19

This is when concumers are willing and able to pruchace a good or service. It is when they have the financial means to buy the product, the ability to buy.

Question 20

Substitutes

Answer 20

If products are substitutes from eachother, thena change in the price of the product, leads to a change in the demand for the other product. They are goods that can replace eachother.

Question 21

Unrelated goods

Answer 21

A change in the price of one product will have no effect on the quantity demanded for the other product.

Question 22

Linear Demand Function

Answer 22

Qd= a-bP

The relationship between the market demand of the product and the price of the product.

Question 23

Linear Supply Function

Answer 23

Qs= c+dP

The relationship between the market supply of a product and the prices of the product.