How do markets work? - what is demand?

6 important questions on How do markets work? - what is demand?

What is a physical market?

A market where the buyer and seller are physically present to trade goods

What is an abstract market?

A market where the buyer and seller do not meet each other on one spot, it is a virtual market

What is the consumer surplus?

The difference between the price the product and the amount the buyer is willing to pay
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What is the equation used for the demand curve?

Qd = -ap + b

Give examples of demand factors

1. The level of income of buyers
2. The needs and preference of the buyers
3. The price of other products; when the price of a product increases people could choose to buy something else

Which formula do you use for calculating price elasticity of demand?

Change of demand in percentages/ change of the price in percentages

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