DEMAND
the desire to own something & the ability to pay for it.
DEMAND
the amount of a good or service that is available.
SUPPLY
good that consumers demand more of when their income increases.
NORMAL GOODS
A very important influence on supply is
SUPPLIER'S INPUT COST
Latin phrase for “all things held constant”
CETERIS PARIBUS
takes place when a consumer reacts to a rise in the price of one good by consuming less of that good
THE SUBSTITUTION EFFECT
producers offer more of a good or service as its price increases & less as its price falls.
LAW OF SUPPLY
are the statistical characteristics of populations; age, race, gender, occupation, income levels.
DEMOGRAPHICS
There are several factors that influence the change in supply:
INPUT COSTS, GOVERNMENT POLICIES, NON-PRICE DETERMINANTS
plays an important role in many trends.
ADVERTISING
The law of demand is the result of not just one pattern of behavior, but two separate patterns that overlap.
SUBSTITUTION EFFECT & INCOME EFFECT
how much of a good or service a producer is willing to sell at a specific price.
QUANTITY SUPPLIED
buy in smaller quantities, or not at all, if your income were to rise & you could afford something.
INFERIOR GOODS
is a government payment that supports a business or market.
SUBSIDY
factors other than price that can affect demand for a particular good or service.
NON-PRICE DETERMINANT
says that when a good’s price is lower, consumers will buy more of it.
LAW OF DEMAND
These 2 movements, combine to create the law of supply.
EFFECT OF PRICE ON PRODUCTION, EFFECT OF PRICE ON NUMBERS OF SUPPLIERS
Changes in the size of this will also affect the demand for most products.
POPULATION SIZE
This is how rising prices draw new firms into a market & add to the quantity supplied of the good or service.
EFFECT OF PRICE ON NUMBER OF SUPPLIER
is a tax on the production or sale of a good.
EXCISE TAX
the change in consumption that results in response to changes in price.
INCOME EFFECT
The promise of higher revenues generated by each sale encourages the firm to produce more.
EFFECT OF PRICE ON PRODUCTION
The current demand for a good is positively related to its expected future price.
CONSUMER EXPECTATIONS
the relationship between marginal revenue (price) and marginal cost.
INPUT COSTS
is government intervention in a market that affects the price, quantity or quality of a good
REGULATION