Business And The Economy Flashcards
An example of opportunity cost
Choosing to stay home and save money rather than to go out for dinner. The opportunity cost is going out for dinner
What is scarcity?!
Is where limited resources are used to satisfy unlimited wants.
What is an example of scarcity?
Trees
What are economic resources?
Are the goods or services available to individuals and businesses used to produce valuable consumer products
What does economic resources include?
Land, capital, labor and enterprise
What is the Law of demand
The law of demand states that as the price of an item decreases the quantity of the item demanded increases
What are some demand factors?
Preferences, expectations, income, price of complementary products, advertising.
What is consumer sovereignty?
The consumer is king (sovereign) in demanding where resources are allocated in a market economy
What are goods?
Goods are physical objects, natural or manufactured, that command a price in the market (tangible)
What are services?
Activities that are non-transferable
They can not be passed on to someone else (non-tangible)
Examples of goods
Food, clothing, machines, land
Examples of services
Haircut, tram ride, dog walking
What is the law of supply?
The law of supply states that as the price of an item increases the quantity being supplied increases
What is Opportunity cost?
The next best alternative that is given up when one choice is made over another
What are some supply factors?
Availability of resources, price of inputs, price of other products, weather, improvements in technology, cost of resources, efficiency of resource use
