Basic Concepts Flashcards
Definition of Market?
Where buyers and sellers interact to trade goods, services etc.. for money or barter.
Definition of Economics?
The study of how individuals and groups make decisions about our limited recourses to best satisfy needs and wants.
Definition of Consumer Sovereignty?
the situation in an economy where the desires and needs of consumers control the output of producers.
Concept of Opportunity Cost?
the loss of one alternative when another alternative is chosen.
What are the 3 Economic Questions?
- What to produce
- How to produce
- For whom to produce
Economic Resource, LAND
Natural resources.
Economic Resource, LABOUR
Work/effort.
Economic Resource, CAPITAL
Man made machinery and equipment.
Economic Resource, ENTERPRISE
Ability to combine resources and take advantage of market opportunities.
Difference between NEEDS and WANTS?
Needs: Essential for survival.
Wants: Non essential items that enhance our standard of living.
Concept of Scarcity?
Economic Problem, Not enough resources to satisfy the unlimited needs and wants.
What is a Complimentary Product?
Products that create demand for one another eg, iPhone and a charger.
What is a Substitute Product?
Products that can be used as an alternative eg, Sugar and Artificial Sweetener.
Law of Demand?
Price rises = fall in demand
Price falls = rise in demand
Factors that could increase demand of a product?
- positive publicity.
- advertising
- preferences
- consumer trends
- income levels
- price of complimentary products
- price of substitutes.
