Business and Economics Flashcards
Relative Scarcity
Humans have unlimited wants but there are a limited amount of resources. Scarcity is the imbalance of unlimited wants and resources which are limited. Choices must be made on what to produce due to limited resources.
Economics
Are the decisions we make. It determines whether or not you’ll be able to purchase products, based on how much they cost and the availability to you.
Opportunity Cost
Is the value of something that is lost because you choose an alternative course of action. Such as you have the option of buying strawberry milk or chocolate milk. Which ever one you don’t choose, that’s the opportunity cost.
Land Resources
Land or raw materials and unprocessed resources taken directly from the environment such as unprocessed farm produce like wheat.
Labour Resources
The work, effort and skills of people in the production process. Example, are people that work to deliver products or people that work to produce products (workers)
Capital Resources
Human made objects that contribute to the production of finished products. Such as machinery, buildings and vehicles. Includes processed parts.
Entrepreneurial Resources
People who possess the skills and resources required to successfully start and manage a business.
Difference between a need and a want
Is that a need is something we believe are necessities of life and that we require it for survival, such as water and air. Whereas a want is something we desire, it’s a good that assist us to enjoy a good standard of living like an iphone.
Why choices need to be made
Because we can’t have everything we want. Choices require giving up something, the opportunity cost.
Markets
Where exchanges occur. It’s where a potential buyer interacts with a potential seller. They both get something out of it.
Price Mechanism
Determines what to produce out of the scarce economic resources we have and determines the prices the products are sold at.
Law of Demand
The amount of a product people want to buy(demand) affected by certain factors.
As the price of an item increases, consumers will be less willing and able to pay therefore demand decreases.
As the price of an item decreases, the quantity of that item demanded by the market will increase.
As price increases usually demand for a product falls. As price decreases demand rises.
Factors of Demand
- Preferences
- Income
- Consumer expectations
- Complementary products
- Substitute product
Law of Supply
As an item’s price increases, so will the quantity of that is supplied by producers will increase. If the price decreases producers will be less willing to supply and supply will fall.
Factors of Supply
- Availability of resources
- Technology
- Weather/natural disasters
- Related goods
