Demand
Explain the 'law of demand'
When prices fall, quantity demanded rises. When prices rise, quantity demanded falls.
Explain the 'law of supply'
When the price rises, businesses usually increase the quantity supplied. When the prices fall, business usually decrease the quantity supplied.
What is market equilibrium?
The point where quantity demanded equals quantity supplied
What do we call two products that can be used instead of each other, such as butter and margarine?
Substitute goods.
What happens to the quantity demanded of a product when its price increases, assuming everything else stays the same?
Quantity demanded decreases.
What happens to the quantity supplied when the price of a product increases, assuming everything else stays the same?
Quantity supplied increases.
what two pieces of information must you give when looking at the equilibrium point between demand and supply?
equilibrium price and equilibrium quantity
What do we call two products that are often used together, such as printers and ink cartridges?
Complementary goods.
Explain the difference between a movement along a demand curve and a shift of the demand curve.
A movement is caused by a change in the product's own price. A shift is caused by a non-price factor such as income, tastes or the price of related goods.
Which way does the supply curve move for a decrease in supply.
to the left
Demand for concert tickets increases while supply remains unchanged. What happens to the equilibrium price and quantity?
Both increase.
Explain the term 'the shadow market'
This is the market where illegal transactions that are not recorded by the government take place, so no taxes are paid on them.
Give one factors that increases demand for a good/service (other than price)
- higher price of substitutes
- lower price of complements
- rising household income
- positive trends, advertising and social media
- unplanned events e.g., covid and toilet paper
Give one factor that increases the supply of goods and services (other than price)
- lower taxes/VAT
- lower cost of production
- improved technology
- favourable unplanned events e.g., good weather
At €5, consumers demand 100 units and producers supply 60 units. Is there a shortage or surplus, and by how much?
A shortage by 40 units
what is ''perfect competition'
In this market there are many sellers who sell identical products. E.g., farmers market
Give three factors that decrease demand for a good or service (other than price).
- lower price of substitutes
- higher price of complements
- falling household income
- negative trends, advertising and social media
- unplanned events e.g., weather and concerts
give three factors that decrease the supply of goods and services (other than price)
- higher taxes/VAT
- higher cost of production
- limited technology
- unfavourable unplanned events e.g., strikes
At €10, producers supply 200 units but consumers only demand 120 units. is this a marekt surplus or a market shortage? and what will happen prices?
Market surplus - prices will decrease
What is a monopoly?
In this market there is only one seller of goods and services. e.g., Irish Rail