The Law of Supply and Demand Flashcards
(65 cards)
1
Q
Terms
A
- Market
- Competitive market
2
Q
is a group of buyers and sellers of a particular good or service
A
Market
3
Q
determine the demand for the product
A
Buyers
4
Q
determine the supply of the product
A
sellers
5
Q
- a market in which there are so many buyers and
sellers so that each has a negligible impact on the market price
A
Competitive market
6
Q
Demand for Good and Services
A
- Demand
- Price
- Quantity Demanded
- Demand curve
- Law of demand
7
Q
- amount of some good or service consumers are willing and
able to purchase at each price
A
Demand
8
Q
Based on needs and wants and ability to pay
A
Demand
9
Q
- shows the relationship between price and quantity
demanded
A
Demand curve
9
Q
-what a buyer pays for a unit of the specific good or service
A
Price
10
Q
- Total Number of Units that consumers would
purchase at a price
A
Quantity Demanded
11
Q
- a rise in price of a good or service increase will
almost always decrease the quantity demanded of such good or
service
A
Law of demand
12
Q
Law of demand
- conversely a _____ in price will _______ the quantity demanded
- In simple terms, price and the quantity demanded has an ______________
A
fall
increase
inverse relationship
13
Q
Supply for Goods and Services
A
- Supply
- Price
- Law of Supply
14
Q
- the amount of some good or service a producer is willing to
supply at each price
A
Supply
15
Q
- in this case is what the producer receives for selling one unit of
a good or service
A
Price
16
Q
- rise in price almost always leads to an increase in the
quantity supplied of that good or service, while a fall in price will
decrease the quantity supplied
A
Law of Supply
17
Q
Law of Supply
- in short, price has a ___________ with the quantity supplied
A
positive relationship
18
Q
- Where Demand and Supply Intersect
A
Equilibrium
19
Q
- The point where the supply and demand curves intersect is called the __________
A
Equilibrium
20
Q
is the price at which supply and demand are
equal
A
equilibrium price
21
Q
is the quantity of a good or service supplied
in the market place when the quantity supplied by suppliers exactly
matches the quantity demanded by buyers
A
equilibrium quantity
22
Q
Surplus and Shortages
A
- Surplus
- Shortage
23
Q
- excess supply, when quantity supplied exceeds the quantity
demanded
A
Surplus
24
Occurs when the price is set at a price above equilibrium
Surplus
25
- excess demand, at the given price, the quantity demanded,
which has been stimulated by lower price, now exceeds the quantity
supplied, which had been depressed by lower price
Shortage
26
Shifts in Demand and Supply
for Goods and Services
Foreword
* Always remember that a change in price or quantity will not affect the supply or demand curve. It will only cause a movement along the
supply and demand curve
* Mathematically speaking, as long as the changes are those variables that are in the graft (in this case quantity and price) there is no shift but only a movement along the curves
* Now if the changes that occur are outside the graph but affect them, that is when a shift occurs.
27
* Always remember that a change in _____ or _________ will not affect the _________ or _____________. It will only cause a ___________ along the
supply and demand curve
price
quantity
supply
demand curve
movement
28
* Mathematically speaking, as long as the changes are those variables that are _______ (in this case quantity and price) there is ______ but only a movement along the curves
in the graft
no shift
29
* Now if the changes that occur are ___________ but affect them, that is when a __________.
outside the graph
shift occurs
30
For this topic repeat this mantra
* Changes in price and quantity will not cause a shift
31
Shifts in the Demand Curve
* Income
* Normal Good
* Inferior Good
* Changing Tastes and preferences
* Changes in the composition of the Population
32
- Increase, shifts the demand curve to the right, decrease shifts the
demand curve to the left
Income
33
- a product whose demand rises when income rises and
vice versa is called a normal
Normal Good
34
- a product whose demand falls when income rises and
vice versa
Inferior Good
35
- the more people would prefer a specific
good or service, the demand curve will shift to the right
Changing Tastes and preferences
36
- demand for good/ service
based on demographics
Changes in the composition of the Population
37
* A society that has more children will have a greater demand for baby carriers and day care facility services, hence the demand curve will shift to the right
Changes in the composition of the Population
38
* A society with more elderly persons has a higher demand for nursing homes and hearing aids
Changes in the composition of the Population
39
* Price of Related Goods
* Substitute
* Complements
40
- a good or service that we can use in place of another good or
service. A decrease in price for substitute will decrease the demand for the other product. This is because, people will demand more for that substitute.
* Substitute
41
- goods often used together, because consumption of one good
tense to enhance consumption of another. An increase of price in a
complement good will decrease the demand of the other.
* Complements
42
* Changes in Expectations about future prices
* A shift in demand happens when change in some economic factor causes a different quantity to be demanded at every price
* for example an expected rise on the price of petroleum products next week,
will increase the demand for pe2troleum products now
43
Shifts in the Supply Curve
* Costs of production
* Changes in weather and other natural conditions
* New technologies for production
* Taxes
* Subsidies
* Number of suppliers
* Barriers to entry
44
- these are also known as input prices. These are
the labor, material and machinery costs in the production of goods
and services. An increase of costs, will decrease supply.
Costs of production
45
- a drought for example would lessen the supply for agricultural products
Changes in weather and other natural conditions
46
- if a firm discovers a new technology
that lowers cost, the supply curve will shift to the right, hence this will increase supply
New technologies for production
47
- they are treated as costs to businesses, hence this will
decrease supply
Taxes
48
- these are government payments to firms or will reduce the
firm’s taxes. It essentially reduces costs of production and hence
increases supply
Subsidies
49
- more suppliers will shift the supply curve to the
right
Number of suppliers
50
- Lower barriers to entry will shift the supply curve to
the right
Barriers to entry
51
These are regulations in businesses like permits etc.
Barriers to entry
52
- An increase in costs of production
Illustration
53
* The Current global Market for Oil is dominated by the ________________________________
Organization for Petroleum Exporting Countries or OPEC
54
* The current members OPEC are ____________________-
Algeria
Angola
Congo
Ecuador
Equatorial
Guinea
Gabon
Iran
Iraq
Kuwait
Libya
Nigeria
Saudi Arabia
United Arab Emirates
55
is a homogenous product (one that cannot be distinguished from
competing products from different suppliers) and everyone practically needs it from transportation to energy, this means that the price is primarily _________ by supply.
Oil
dictated
56
* So, the countries who _______ oil, created the _________ so that the Price of oil can be __________. Each country basically _______ their oil production up to a certain level that is designated by OPEC.
export
OPEC
controlled
limit
57
* Although OPEC holds _____ of the current oil reserves globally, there are non OPEC countries that produce Oil, these are _____ and _________
80%
Russia
United States
58
* This occurred during 2014-2016, all time low was in 2020’s first quarter where in the price of oil even became negative
Oil Price Plunge
59
* What happened was the United States, created an initiative to harvest a new type of oil which is _______.
shale oil
60
* _________ found this as a threat to its oil centered economy, so they produced more and more oil in a bid for cutthroat competition Just like what John D. Rockefeller did in his Standard Oil
Saudi Arabia
61
Why is oil expensive now
* Corona virus halting the logistics
* decreased production from opec and
* the war in ukraine that lead to sanctions
62
Fluctuations in Agricultural Commodities
* Rice was cheaper at the time of the Duterte administration because
he allowed the importation of rice and just put a tariff on it.
* When president Marcos came into power he prohibited the importation of rice, making it more expensive since supply has decreased
* In general, in the Philippines, since we lack “post-harvest facilities”
there exist high cyclical agricultural fluctuations
* Farmers would dump their produce at times of excess supply so as not to sell it at a loss
* Then, on the next cycle, lack of supply would mean higher price
63
* _____ was cheaper at the time of the Duterte administration because he allowed the importation of rice and just put a tariff on it.
Rice
64
* In general, in the Philippines, since we lack “___________”
there exist high cyclical agricultural fluctuations
post-harvest facilities
