Basic Economic Concepts

Question 1

What is economics?

Answer 1

The study of how wealth is created and distributed. Also of how and why decisions are made regarding the use and distribution of economic resources.

Question 2

What is market?

Answer 2

A situation where potential buyers are in contact with potential sellers and there is means of exchange. Usually money for a service or good.

Question 3

What is consumer sovereignty?

Answer 3

The situation in an economy where the desires and needs of consumers control the output of producers.The consumer is king in deciding where resources are allocated in a market economy.

Question 4

What is opportunity cost?

Answer 4

Whenever an economic decision is made about how an economic resource is going to be used something else or an alternative use for that resource is forgone. This is known as opportunity cost.

Question 5

3 economic questions

Answer 5

What to produce
How to produce
whom to produce it for

Question 6

What are the economic resources?

Answer 6

land
labour
capital
enterprise

Question 7

Land

Answer 7

Is any natural resource. ie; farmland, sun, water, wind, tree, plants, oil

Question 8

Labour

Answer 8

Any human service whether it be intellectual or physical. Some labour comes naturally but you can add by learning new skills.

Question 9

Capital

Answer 9

Is machinery and equipment. The machines in the factory, the factory, computers

Question 10

Enterprise

Answer 10

The qualities some individuals possess that make them able to accurately perceive market opportunities and effectively coordinate the production process. These people can manage workers, capital and land resources to produce the goods and services that will be brought by consumers.

Question 11

Difference between needs and wants

Answer 11

Needs are something that you cannot survive without, and wants are material objects that are not essential.

Question 12

Scarcity

Answer 12

The fundamental economic problem of having seemingly unlimited human wants in a world of limited resources. It states that society has insufficient productive resources to fulfil all human wants and needs.

Question 13

Complementary products

Answer 13

A complementary product-more commonly referred to as a complementary good in economics-is an item that often has an interrelated use with another good. ie; hot dogs and hot dog buns, automotive vehicles and rubber tires, or hamburgers and hamburger buns.

Question 14

Substitute products

Answer 14

product that appears to be different, but can satisfy the same need as another product. For example, the internet is a substitute for a fax.

Question 15

Law of demand

Answer 15

If price increases demand for a product fall, as price falls the demand for a product increases. This is known as a law of demand.

Question 16

Factors of demand

Answer 16

Expectations
Price of complementary products
Price of product itself
Income 
Preferences
Price of substitute

Question 17

Law of supply

Answer 17

As price increases supply of a product increases, as price falls the supply decreases. This is known as the law of supply.

Question 18

Factors of supply

Answer 18

Price of other products
Price of the product
Price of inputs
Technology
Weather/natural disasters

Question 19

Equilibrium

Answer 19

The price where the consumer demand equals the supply of goods; where the demand and supply lines intersect.