Basic Economic Concepts Flashcards
Define economics
The science that deals with the production, distribution and consumption of commodities. The branch of knowledge concerned with the production, consumption and transfer of wealth.
Define market
A situation where potential buyers are in contact with potential sellers and there is a means of exchange. The types of markets are; monopoly, oligopoly and perfect market
Define consumer sovereignty
The consumer is King in deciding where resources are allocated in a market economy. As the consumer demands to buy a product the entrepreneur coordinates land labour and capital resources in the production process and makes the goods, moving away from producing goods and services that the consumer doesn’t want
Define opportunity cost
It is the last alternative use to which the economic resources could have been allocated. What we missed out on by choosing something else. For example to spend money from part-time job at the movies instead of going out for dinner.
What are the three economic questions?
What to produce, how to produce, for whom to produce.
What is economic resources
The inputs required by the producer to complete the production process. They are land labour capital and enterprise.
What is land in terms of economic resources
Refers to the natural resources. For example fertile pastors for crops and farm animals, reserves, Forest, oceans
What is labour in terms of economic resources
The people power available to work in the production process. Electrical engineers, blue-collar workers and builders.
What is Capital in terms of economic resources
The machinery, and equipment made by people to assist in the manufacture of commodities and provision of services. Tractors cargo ships and trucks
What is enterprise in terms of economic resources
The quality is some individuals possess that make them able to accurately perceive market opportunities and affectively coordinate the production process. An entrepreneur.
What is the difference between needs and wants
A need is something that is a necessity in your life for example food, water, shelter, clothing.
I want is something that is not absolutely necessary, it. You just think you need it. Video games, books, jewellery
Define scarcity
The problem of limited resources being available to satisfy unlimited funds. Having unlimited wants to only having limited resources. For example in the year 10 social he may want to have it in Fiji but we can’t because too many people there is too much money.
What is the difference between a complimentary products and substitute products
Complimentary products products that are sold separately, but that are used together, each creating a demand for the other. Examples meat pie and sauce, remote and batteries.
A substitute product is two products that can be used for the same purpose. The price for one good increases,then the demand for the other product is likely to increase. Margarine and butter, tea and coffee, McDonald’s or KFC
What is the law of demand
The law of demand states that consumers are more willing and able to buy a product the cheaper the price. As price increases, the level of demand decreases, as prices decrease, consumer demand increases.
Factors that could increase demand
Lower prices, price of substitutes, weather, Quality
