Supply and Demand Flashcards
(14 cards)
Demand
a consumer’s desire and ability to pay a price for a commodity. When demand increases, conditions improve and when demand decreases, conditions worsen.
The Law of Demand
as prices increase, demand decreases and vice versa
Movement in Demand
refers to a change in the price of a commodity. There are two types of contractions and expansions
Movements in Demand: Expansions
when demand increases
Movements in Demand: Contractions
when demand decreases
Shift in Demand
a change in the market conditions influencing demand will result in the position of demand curve to shift to the left or right.
Market Changes Influencing Demand
the price of commodities, buyers’ income, buyers’ taste, population changes, buyers’ expectations for the future.
Supply
the quantity of a commodity that will be offered for sale in a market at a certain time. When supply increases, conditions improve and when supply decreases, conditions worsen.
Law of Supply
as price increases, supply increases and vice versa.
Movement in Supply
a change in the price of a commodity will result in movement. Movements will either be expansion or contraction.
Movement in Supply: Expansion
supply increases
Movement in Supply: Contraction
supply decreases
Shift in Supply
a change in the market conditions influencing supply.
Factors Effecting Shift in Supply
changes in wages, business taxes, the price of raw materials, availability of resellers.
