2. Market To Market Flashcards
The economic term for scarcity
Is the ongoing economic problem where society has an excessive and growing list of wants and needs with only a limited amount of goods and services. When the supply of a product is less the demand is usually higher.
The economic term for opportunity cost
OC- is the alternative use to which the economic resources could have been allocated. This also applies for consumers deciding to purchase one item but with two options for example could be faced with two options and purchased one item over the other. The option the consumer didn’t choose is the opportunity cost.
What are economic resources
The inputs required by the producer to complete the production process. The resources needed in the production process are: land,labour capital and enterprise
The law of demand
States that the consumer demand is inversely proportional to the movement in price of the product. As the price of a product or commodity increases consumer demand will then decrease. This is because consumers opportunist cost to acquire the good or service will increase.
Demand factors
Preferences, price of substitutes and expectations
Define consumer sovereignty
Ultimately means that the consumer is king in deciding where resources are allocated in a market economy. The consumer decides on the allocation of limited resources in order to satisfy their wants and needs.
The difference between goods and services
A good is an item that is tangible and in most cases can be used more than once. Whereas a service is intangible and performed for you for the exchange for money for example a haircut.
The law of supply
States that as the price of a good or service increases the supplier is more willing to produce the product. As the price of a good or service decreases the supplier is less willing to produce the product.
Complimentary goods and substitute goods
CG- are two products that compliment each other and are often sold in the same store for example jean store will sell jeans as well as a belt to go with it. Whereas a substitute good is often a cheaper option where the consumer can’t afford to but the original product and will end up buying the cheaper option that performs the same job but at a lower place.
Three supply factors
Availability of resources, cost of resources to make the product, efficiency in resource use.
Difference between land labour and capital resources and examples
Land- refers to natural resources such as fertile pastures to develop crops and farm animals. Forests which provide timber and ocean which provide fish to eat.
Labour - person power available to work in the production process such as electrical engineers and carpenters.
Capital - machinery plant and equipment made by people to assist in the manufacture of commodities. Examples : tools tractors and cargo ships
