Economic Basics Flashcards
What does the law of demand state?
As the price of a good or service decreases, the quantity demanded increases, and as the price increases, the quantity demanded decreases.
What does the law of supply state?
As the price of a good or service increases, the quantity supplied increases, and as the price decreases, the quantity supplied decreases.
Name one factor that influences demand.
Changing consumer income.
Name another factor that influences demand.
Changing consumer tastes.
What is market equilibrium?
The point where the quantity of a good or service demanded equals the quantity supplied at a certain price.
What is a sole proprietorship?
A business with one owner who gains all the benefits and assumes all the risks.
List one advantage of a sole proprietorship.
Easy and inexpensive to establish.
List one disadvantage of a sole proprietorship.
Unlimited liability.
What is a partnership?
A business owned and operated by two or more people.
What is a limited liability partnership?
A type of partnership where each partner’s personal property is protected.
List one advantage of a partnership.
Shared risk.
List one disadvantage of a partnership.
Shared decision-making.
What is a corporation?
A legal entity separate from its owners that can enter into contracts and own property.
What is limited liability in the context of corporations?
Owners are only responsible for the amount of money they have invested in the business.
What is a franchise?
A business model where individual outlets are owned but operate under a parent company’s name and rules.
What is a co-operative?
A specialized non-profit business owned and run by its customers for their own benefit.
What is a non-profit organization?
Businesses that may have a surplus but use it for programs and future expenses.
True or False: In a corporation, the owners are responsible for the company’s debts beyond their investment.
False.
Fill in the blank: The motto of a co-operative is ‘______’.
People first, profits second.
What is one factor that influences demand?
Changing consumer income
This refers to how much money people earn, which affects their purchasing power.
What is another factor that influences demand?
Changing consumer tastes
This pertains to what is in fashion and what people want to buy.
What factor related to future perceptions influences demand?
Changing expectations for the future
Expectations about future income or prices can affect current demand.
How does population affect demand?
Changes in population
A decrease in population typically leads to a decrease in demand, while an increase in population usually results in higher demand.
What is a factor that influences supply?
Change in number of producers
An increase in the number of producers can lead to an increase in supply.
What role do prices play in influencing supply?
Changes in prices
When prices rise, producers may be more inclined to supply more of a good.
How does technology influence supply?
Changes in technology
More efficient technology can lead to faster production and lower costs, increasing supply.
What future-related factor affects supply?
Changing expectations for the future
Producers may adjust their supply based on expectations of future market conditions.
What factor related to costs influences supply?
Changing production costs
An increase in production costs can decrease supply, while a decrease can increase it.
