Economics (Fach) / demand (Lektion)
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supply and demand
Diese Lektion wurde von matildaws erstellt.
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- Supply and demand are the forces which make the market economies work. They determine the quantity of each good produced and the price at which it is sold.
- A market is a group of buyers and sellers of a particular good or service.
- Monopoly: a firm that is the sole seller of a product without close substitutes. There is one seller, who determines the price.
- Oligopoly: Not many competition, a few sellers offer similar or identical products, and dominate together the market.
- Monopolistically/imperfectly competitive: Many sellers, but they are offering different products. Because the products are not the same, the seller has some influence on the price for its own product. (Magazines)
- Quantity demanded: the amount of a good that buyers are willing and able to purchase. Quantity demanded is negatively related to the price.
- Law of demand: the quantity demanded of a good falls when the price of the good rises and vice versa.
- Shifts along the demand curve A movement along the demand curve occurs when there is a change in price. A movement along the demand curve is called a change in quantity demanded.
- Shifts in the demand curve The shift in the demand curve is referred to as an increase or decrease in demand
- Normal good: demand falls when income falls
- Inferior good: demand rises when income falls and vice versa (bus rides)
- Substitutes: two goods for which an increase in the price of one leads to an increase in the demand for the other. This goods satisfy similar desires, and in the one gets cheaper consumers choose for the other good.
- Complements two goods for which an increase in the price of one leads to a decrease in the demand for the other ( and vice versa). These goods are often pairs of goods that are used together (coffee and coffee milk).
- There are different factors which can make the demand curve shift: Income Prices of related goods: Tastes: Expectations: The size and structure of the population
- Quantity supplied: the amount of a good that sellers are willing and able to sell
- Law of supply: The quantity supplied of a good rises when the price of the good rises.
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- Market supply: the sum of the supplies of all sellers.
- There are different factors that can make a shift in the supply curve: Input prices: When the price of inputs rises, producing becomes less profitable Technology: Advances in technology increase productivity allowing more to be produced using fewer factor inputs. As a result, costs fall and the supply increases. Expectations: Natural/Social factors: Weather, disasters, diseases etc.
- The equilibrium price is sometimes called market-clearing price because at this price everyone in the market has been satisfied ( buyers have bought all they want to buy and sellers have sold all they want to sell).
- surplus of a good: a situation in which quantity supplied is greater that quantity demanded. In this situation the sellers are unable to sell all they want at the going price, this situation is sometimes called excess supply.
- shortage of the good: a situation in which quantity demanded is greater than quantity supplied. In this situation buyers are unable to buy all they want at the going price. This situation is sometimes called a situation of excess demand.
- Changes in the equilibrium can be analyzed, this analysis is called comparative statics