Key Words

• Substitute goods


  where one type of product could be replaced with another
• complementary goods


  where one product is used at the same time with another product
• demographics

  anything to do with the structure of the population
• external shocks


  an event which causes significant change - war, terrorism, disease outbreak
• seasonality


  any predictable change or pattern in a time series that recurs of repeats over a one-year period
• productivity


  the rate at which goods and services are produced
• shock


  an event which causes a change within an economy which occurs outside of it

  unpredictable and may affect supply
• automation


  method of operating or controlling processes by automatic means using devices

  reduces need for human interaction
• mechanisation


  method of operating or controlling processes using machinery
• indirect tax


  taxes put on products or services before they reach the consumer

  VAT and excise duty
• government subsidy

  a grant or gift of money from the government to encourage supply of certain goods
• supply

  the amount of product or service that a business is willing and able to provide at a given price
• demand

  amount of product or service that customers are willing and able to buy at a given price
• supply curve

  a line to plot the relationship between price and quantity supplied
• demand curve

  a line to plot relationship between price and quantity demanded
• normal good


  products where an increase in consumers income means an increase in demand
• inferior good


  products where an increase in consumers income means a decrease in demand
• elasticity

  a measure of responsiveness
• Price Elasticity of Demand (PED)


  how much demand changes when the price of a good changes

  $PED =$$\frac{\%\Delta\mathit{QD}_{}}{\%\Delta\mathit{P}_{}}$
• Income Elasticity of Demand (YED)


  how much demand changes when the consumer has a change in income

  $\ {YED} =$$\frac{\Delta\mathit{Qd}_{}}{\Delta\mathit{Y}_{}}$