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Flashcards in Theme 1.2 Deck (19):
1

Inferior goods

Ones for which sales fall when people are better off, but rise when consumers are struggling financially

2

Luxury goods

Ones for which sales rise rapidly when people are better off, but may fall rapidly in hard times

3

Normal goods

Ones for which sales move in line with changes in consumer incomes

4

Seasonal variation

Change in the value of a variable that is related to the seasons

5

Substitutes

Products or services in competition with each other, so customers will substitute one for the other

6

Market price

The price of a commodity that has been established by the market-that is, where supply equals demand

7

Supply chain

The whole path from suppliers of raw materials through production and storage on to customer delivery

8

Supply curve

A line showing the quantity of goods firms want to supply at different price levels

9

Commodity markets

These cover undifferentiated products such as rice, oil or gold. The principle is that every kilo is the same as every other kilo, so traders can buy and sell without needing to worry about which kilo they are dealing in

10

Demand curve

The line showing the demand for a product at different prices

11

Market price

The price of a commodity that has been established by the market-that is, where supply equals demand

12

External constraint

Something outside the firms control that can prevent it achieving its objectives

13

Predatory pricing

Pricing low with the deliberate intention of driving a competitor out of business

14

Price elastic

A product with demand that is highly price sensitive to price elasticity is above 1

15

Price inelastic

A product with demand that is not very price sensitive, so price elasticity is below 1

16

Negative income elasticity

A product for which sales fall when people are better off

17

Positive income elasticity

A product for which sales rise when people are better off

18

Recession

Two or more quarters of negative economic growth

19

Complementary goods

These are bought in conjunction with each other, such as eggs and bacon or cars and petrol