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Non-Price Determinants of Supply and Demand
Terms in this set (14)
The higher the income, the more people tend to buy
Consumer Expectations (demand)
Future price of a good determines current demand
More people = more demand; less people = less demand
Consumer tastes and advertising (demand)
What is popular with consumers will grow in demand (Fads). The goal is to sell more products
Complimentary goods / related goods (demand)
Items that are bought together. When demand increases for one it increases for the other one. (Ex: phone & charger)
Substitute goods / related goods (demand)
A good or service that can closely replace another good
Rising cost / input costs (supply)
The cost of factors of production to make a product increases. Supply decreases.
Technology / inputs costs (supply)
An increase in technology makes production more efficient. Supply increases.
Subsidies / government intervention (supply)
Government pays to support a market or business. Supply increases.
Taxes / government intervention (supply)
Excise tax: a tax on the production or sale of a good. Supply decreases.
Regulation / government intervention (supply)
Government intervention in a market that affects price, quantity, or quality of a good. Supply decreases.
Foreign goods (supply)
Input costs, and government intervention can have an effect on the supply of foreign goods that we buy in the US.
Future expectations of prices
future v present supply
Similar to future expectations in demand. Demand increases when supply increases on specific goods. (Ex: heart shaped candies around January & February).
Number of suppliers (supply)
More businesses = higher supply & less businesses = lower supply.
T or F: A public good is a good or service for which consumption by one person makes consumption by others impossible
If everything is equal (conditions of ceteris paribus prevail), which pricing tactic is usually the best?
Sheryll decides to spend three hours working overtime rather than watching a video with her friends. She earns $10 an hour. Her opportunity cost of working is
Peter must decide if he should add one more dog to his dog-walking business. What is this decision an example of?
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