S2 the market Flashcards
(22 cards)
what is meant by the term demand?
demand is the number of products customers are willing and able to buy at a given price.
what is a complementary good?
it is a good that is consumed together with another good, such as cars and petrol.
define the term normal good?
a normal good is one for which demand increases as consumer income rises.
True or False?
there is a correlation between the quantity demanded by customers and the price.
True:
there is a negative correlation between the quantity of a product demanded by customers and its price.
what happens to demand for most products when prices increase?
when the price increases, the quantity demanded decreases.
what is a substitute good?
it is a replacement good, such as different brand of car.
what happens to demand for most goods wen prices decrease?
when prices decrease, the quantity demanded increases.
define the term inferior good.
an inferior good is one for which demand decreases as consumer income rises.
T or F?
an increase in spending on advertising is likely to shift the demand curve to the left?
False:
an increase in spending on advertising is likely to shift the demand curve to the right.
what is meant by the term supply?
supply is the number of goods/services businesses are willing to sell at a given price in a specific time period.
T or F?
there is an no relationship between supply and price.
False:
there is a positive correlation between supply and price.
what happens to the supply of most goods when the price increases?
the prices increase the quantity supplied increases.
what is meant by the term indirect tax?
an indirect tax is one that causes an increase in the costs of production, such as value-added tax (VAT).
what happens to supply when prices increase?
when the price decreases the quantity supplied decreases.
what is subsidy?
a subsidy is a form of financial assistance given to a business by the government, and it reduces the costs of production.
what happens to the equilibrium price if the supply curve shifts to the left?
if the curve shifts to the left the equilibrium price increases.
what is a market?
a market is any place that brings buyers and sellers together to trade at an agreed price.
define the term market equilibrium.
market equilibrium is the point where the quantity demanded equals the quantity supplied at a specific price.
what is the price elasticity of demand
when there is an increase in price, there will be a fall in the quantity demanded and when there is a fall in price there will be an increase in the quantity demanded.
what is the formula for PED
PED= %change in demand / %change in price
to calculate the percentage change-
% change = new value-old value / old value x100
