Demand and Supply + Equilibrium

Pregunta	Respuesta
What is demand?	The ability and willingness to buy a quantity of a good or service at that price in a given time period.
Law of Demand?	As the price of a good fall, the quantity demanded, will usually increase, cetris paribus.
What is meant by the change in demand?	When the curve shifts. Due to a change in another determinant.
Change in quantity demand.	Movement along the line. When the price changes.
What are the 5 non-price determinants of demand?	Taste, Buyer, Income, Price of other products, Expectations.
The two income goods.	Normal goods- income rises, demand rises. Inferior goods - as income rises, demand falls.
State the prices of other products.	Substitutes - When a related product decreases in price, demand will increase. However, the related good, the demand will fall, but the price stays the same. Complements - These are goods, which are related, meaning that when you buy one of them you have to buy the other one too. When for one of the goods the price falls, the demand will increase. For the other product, nothing has changed, however, the quantity will increase, due to the other good.
What is supply?	The ability and willingness of a producer to produce a quantity of goods or services at a given time period.
Law of supply?	As the prices of a product rise, the quantity supplied of the product would increase, cetris paribus.
The 5 non-determinants of supply	Cost of factors fo production, state of technology, Price of other products, government intervention, expectations.
Separate into two parts the price of other products	Joint supply Competitive supply.
government Intevrention	Subsides right taxes and regulations: left.
What is a market?	when buyers and sellers meet to carry out an economic transaction.
the relationship between an individual consumer’s demand and market demand.	Market demand is the sum total of all individual consumers’ demand
Describe the relationship between an individual consumer’s supply and market supply.	Market supply is the sum total of all individual producers’ supply.
what is an equilibrium?	The market-clearing price and quantity, where demand meets supply.
In short excess supply?	If the price is too high, there will be a surplus.
In short excess demand?	If the price is too low, there will be a shortage. (Supply left, demand right.
Graph descirption of excess supply.	At this price, there is an excess supply of Qs-QD. More is being demanded at this price, which causes a downward pressure on the price.
Graph description of excess demanded.	At this price, there is an excess demand of QD-QS. More is being demanded than supplied at this price, whcih causes an upward pressure on the price.
What is price mechanism?	The interaction of buyers and sellers in free markets enable goods services and resources to be allocated by prices.
Second description of excess supply?	To eliminate the surplus, suppliers will have to lower their prices. This will cause the quantity demanded to increase and the quantity supplied to decrease until the new equilibrium is reached.

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