Economics 2

Front 1

Whatis a simple Supply and Demand Model?

Back 1

SimpleSupply and Demand Model helps to understand how the quantity sold on the marketis related to the price and is a model showing how the market functions. IE: why hotel prices change at certain times of the seasons.

Front 2

InEconomics, what is meant by the word

“market”?

Back 2

A market is any place that buyers and sellers come together to trade money for a good or service.

Front 3

Whatcurve captures buyers behaviour?

Back 3

the demand curve captures the buyers behaviour.

Front 4

Whatcurve captures sellers behaviour

Back 4

the supply curve captures the sellers behaviour.

Front 5

How is aSupply and Demand model helpful?

Back 5

the supply and demand model can help us to predict market shifts and price variations. ie hotels at certain times of the year.

Front 6

InEconomics what is Demand?

Back 6

demand is the desire of people to buy things, demand meaning how much a person is willing to pay for said things.

Front 7

InEconomics, what is Quantity Demanded?

Back 7

is the amount a person will demand at a given price. Jeans 1x 50euro or 2x24.50euro.

Front 8

Whataffects Demand?

Back 8

price, income and preference effect demand. if you have a larger income you will buy larger quantities. these would be normal goods. goods you would stop buying are inferior goods.

Front 9

Whataffects Quantity Demanded?

Back 9

tastes, preferences incomes would affect quantity demanded.

Front 10

On theDemand Curve what is plotted on Y axis? What is plotted on X axis?

Back 10

the demand curve is drawn with price on the vertical (y) axis and quantity on the horizontal (x) axis

Front 11

Whydoes Demand Curve sloped down?

Back 11

The demand curve slopes downward, reflecting an inverse relationship between the price of and the quantities of a product people want to buy.

Front 12

Whatcause a move ALONG a Demand curve?

Back 12

an increase or decrease in price would move you along the demand curve

Front 13

What causesa SHIFT in a Demand Curve?

Back 13

any factors that are not associated with price cause a shift in the demand curve. EG: If the government said red bull gave you super powers people would go and buy more red bull.

Front 14

Whatdoes the slope of the demand curve depends on?

Back 14

the slope of the demand curve depends on how people view the trade offs that price changes force them to make, and how you feel about the good relative to other goods.

Front 15

Whatdoes perfectly elastic demand mean?

Back 15

a perfectly elastic demand is when such a small change in the price causes a big change in the amount demanded. IE: big orders of produce, if the price drops by 1c people will buy more, if it increases by 1c people will buy less. it is shown on the demand curve by a horizontal line.

Front 16

Whatdoes perfectly inelastic demand mean?

Back 16

a perfectly inelastic demand is when the demand for a product has reached a level that any price can be put onto a product. this is shown as a vertical line on the demand curve.

Front 17

Whatis the implication of demand elasticity for a supply side?

Back 17

demand elasticity on the demand side helps the seller to understand whether to raise the price, this can be done on the demand curve by drawing the predicted price raise and showing the predicted revenue box.

Front 18

How supply curve is seen by the economists?

Back 18

the supply curve is drawn as a slope rising upward from left to right, since product price and quantity supplied are directly related.

Front 19

How does the supply curve slope?

Back 19

the supply curve slopes upwards showing the MINIMUM price that you can pay the supplier and still et the desired amount from him. the price he quotes you is to cover his own costs, (land, capital, labour, plant)

Front 20

Whatdoes each amount on a supply curve represent?

Back 20

Each amount on the supply curve represents how much the supplier can afford to sell that quantity to you for, while also covering his own costs. if it costs him 50c per product to make, he cannot afford to charge you 49c per product.

Front 21

What affects the quantities supplied?

Back 21

Technology, Cost, Factors of Supply, other products seasons and weather. any other factor that is not price.

Front 22

How price affects quantities supplied?

Back 22

Because his costs of production have increased, the minimum you have to pay him to produce any given level of output also goes up. Consequently, his supply curve shifts upward vertically.

Front 23

Whatcauses the supply curve to shift?

Back 23

Anything that changes the producers costs structures shifts the supply curve.

Front 24

Whatis supply elasticity?

Back 24

supply elasticity is when you can produce a product for the same price each time. so whether you produce 1 unit or 1000 the price is static. it is shown as a horizontal line on the supply curve.

Front 25

Whatis market equilibrium?

Back 25

The equilibrium of the supply and demand model is where the demand and supply curves cross. The price and the quantity where the curves cross are how much the good or service in question costs and how much of it gets sold.

Front 26

Whatis excess supply?

Back 26

if the price starts out higher than the equilibrium price, then the quantity demanded by buyers is less than that supplied by the sellers. this is excess supply.

Front 27

Whatis excess demand?

Back 27

if the price is lower than market equilibrium the amount the buyers want to buy would exceed the amount the suppliers want to sell. this is excess demand.

Front 28

What are priceceilings and price floors? How do they affect market equilibrium?

Back 28

price ceilings and price floors are when governments intervene in the market and regulate the price, a ceiling to stop markets raising the prices above a certain level, causing excess demand, and a price floor to stop the prices from going too low, causing excess supply.

eg: rent rates (ceiling) Milk sales(floor)