Ch 1, 2 & 3 Flashcards
What is the factor market?
The buying and selling of the factors of production or resources
What is the product market?
It deals with the buying and selling of goods and services.
Consumers = demand Producers = supply
What is the economic problem? [1]
The fact that people have limited resources to fulfil their unlimited wants.
What is scarcity? [1]
It is the problem that there are not enough resources to satisfy an infinite number of wants.
Define free goods
Free goods do not have a price and are not relatively scarce.
Characteristics of a market/ competitive market? (4)
[2]
Characteristics of a competitive market
- a large number of buyers and sellers
- very similar products (little product differentiation)
- easy entry into the market (no barriers to entry or exit)
- little or no variation in price
What is non-perfect market? [2]
3
- one dominant firm
- product differentiation
- barriers to entry
What are the non-price factors affecting demand? (5)
[2]
Non-price factors of demand
- income of consumers
- preferences of consumers
- expectations of consumers
- demographic and other factors
- price of related goods (complementary and substitute goods)
Define the quantity demanded
The willingness and ability of consumers to purchase a particular good at a particular price at a particular place in time.
How do movements along the demand curve occur?
Expansion= ⬇️ price Contraction= ⬆️price
How do shifts occur along the demand curve?
Non price factors
To the right= ⬆️ demand
To the left ⬇️ demand
