Defintions Flashcards
Define resources
Refers to factors of production that are necessary to produce a good or service
Define Goods
Goods are said to be tangible
Define services
Services are intangible
Define Needs
Needs are the basic requirements of life and are limited
Define wants
Wants are what people like to have and are unlimited.
Define factors of production
The resources that are needed to produce a good or service
Define Scarcity
Refers to a situation where resources are insufficient to satisfy consumer needs and wants
Define opportunity cost
It is the next best alternative forgone
Define capital goods
Goods that are used to produce consumer goods
Define consumer goods
Goods that are used up immediately
Define the PPC
It is a graph that shows the maximum possible combination of 2 types of goods that can be produced by a country when all resources are fully utilized given that the level of technology is constant.
Define consumer rationality
The concept of rationality explains that people act in a rational manner to maximize their utility.
Define a market
Any arrangement that enables buyers and sellers to communicate and exchange goods and services.
Define demand
The quantity that consumers are willing and able to buy at a given price over a period of time
Define demand schedule
Demonstrates the various quantities demanded at various prices
Define demand curve
A diagram that demonstrates a demand schedule
Define supply
The quantity that producers are willing and able to sell at a given price over a given period of time
Define supply schedule
Demonstrates various quantities supplied at various pricesD
Define supply curve
A diagram that demonstrates a supply schedule
Define market equilibrium
The point where market forces of demand and supply interact with one another to determine the equilibrium price and quantity
Define Price elasticity of demand
Refers to the responsiveness of demand to a change in the price of a good
Define price inelastic demand
Refers to a situation when percentage change in quantity demanded is less than the percentage change in price
Define price elastic demand
Refers to a situation when percentage change in quantity demanded is greater than the percentage change in price
Define perfectly inelastic demand
Refers to a situation when the quantity demanded does not change as a result of a change in price
Define perfectly elastic demand
Refers to a situation when consumers continue to purchase an unlimited quantity of goods at a particular price.
Define unitary elastic demand
Refers to a situation when the percentage change in quantity demanded is equal to the percentage change in price.
Define PES
The responsiveness of supply to a change in price
Define YED
The responsiveness of demand to a change in the incomes of a consumer.De
Define normal goods
Goods that have a positive relationship with income and demand
Define inferior goods
Goods which have a inverse relationship between income and demand
