Basic Economic Concepts Flashcards
What is a market?
A situation where potential buyers are in contact with potential sellers and there is a means of exchange. Types of markets include:
monopoly- one firm dominates eg. Australian post
perfect competition- many different buyers and sellers eg, local shops and restaurants
oligopoly- an industry dominated by a few firms eg. Coles, Safeway
What is consumer sovereignty?
The power of consumers to determine what goods and services are produced based on what they purchase
What is opportunity cost?
The lost alternative use to which the economic resources could have been allocated. Eg. Having fruit instead of chocolate, chocolate is the opportunity cost
What are the three economic questions?
What to produce?
How to produce?
For whom to produce?
What is the difference between needs and wants
Needs are things you need to enable survival, eg. Food, water. However, wants are something you desire the possession of eg. Money, car, boat
What is scarcity?
Scarcity is the problem of limited resources being available to satisfy unlimited wants.
What are land resources
Natural resources eg. Wheat
What are labour resources?
Person power available to work in the production process
What is a capital resource?
A capital resource is machinery, plan and equipment made by the people to assist manufacture of commodities and provision of services
What is the enterprise resources?
Enterprise resources are qualities and individual portrays to accurately perceive market opportunities and effectively co ordinate the production process
What are complimentary products?
Complimentary products are materials or goods whose use is related with the use of an associated or paired good such that demand for one generates demand for the other
eg. Car and petrol
What are substitute/supplementary products?
Two products that could be used for the same purpose. If the price of one good increases, then demand for the substitute is likely to rise
Eg. Butter and margarine
What is the law of demand and what could increase demand on a product?
Consumers are more willing and able to buy a product the cheaper the price. As prices increase, the level of consumer demand decrease and vice versa. An effective ad campaign, weather, increase in income, taste
What’s the law of supply and what can increase supply of a product?
Producers are more willing and able to supply a product, the higher the price they will receive- as prices increase, the level do prices supply increases. The reason for this is do the produces may receive an increase in profit.
Availabilities of products, cost of resources, efficiency in resources used.
What is the equilibrium price?
The amount that consumers are willing and able to buy at he given price is equal to the amount the producers are willing and able to supply
