Economic Concepts

Question 1

Define the law of supply

Answer 1

The law of supply states that the higher the price gained for an item, the more that will be supplied. As the price increases the level of producer supply increases, the reason is so the producer makes maximum profit

Question 2

Define land

Answer 2

Land is the natural recourses, such as pastures (for crops), mineral reserves (for construction of buildings), forests (timber for buildings) and the ocean (fish to eat, and pearls to wear)

Question 3

Define opportunity cost with an example

Answer 3

Opportunity cost is the lost alternative use to which the economic resources could have been allocated. Example going to the movies when you could’ve gone to a concert instead, thus the opportunity cost of this situation is the movies.

Question 4

Difference between needs and wants

Answer 4

Needs a basic essentials needed to survive example water. Where as wants are things that we desire but aren’t necessary to our lives. Wants are I unlimited and are constantly changing throughout our lives.

Question 5

Define market

Answer 5

A situation where potential buyers are in contact with potential sellers and there is a means of exchange

Question 6

What are the three economic questions

Answer 6

What to produce
how to produce
For whom to produce

Question 7

What is the law of demand

Answer 7

The law of demand states that consumers are more willing and able to buy a product the cheaper the price. As the price increases the level of consumer demand decreases and vice versa

Question 8

Factors that can influence the demand of a product

Answer 8

Price
An affective advertising campaign
Change in weather/seasons
A change in fashion/ taste
An increase in price of a substitute product
A decrease in price of a complementary product

Question 9

Define complementary product

Answer 9

A good or service that compliments opposite self with another good or service. I demand for one generates a demand for the other. Example printer and ink

Question 10

Define economic recourses

Answer 10

Economic resources are the inputs required by the producer to complete the production process. These economic resources are land, labour, capital, and enterprise

Question 11

Define labour

Answer 11

Labour is the person power available to work in the production process

Question 12

Factors that could increase the supply of a product

Answer 12

Availability of recourses
Cost of recourses
Efficiency in recourse use

Question 13

Define consumer sovereignty

Answer 13

The consumer is king (sovereign) in deciding where resources are allocated in the market economy. This means that the producers adapt to changes in the marketplace, and produce more of the goods and services that are popular for consumers, and less of the goods and services that are least popular

Question 14

Define economics

Answer 14

Is the study of how people interact with each other. Also how people make choices with limited resources to best satisfy their needs

Question 15

Define scarcity

Answer 15

Scarcity is the fundamental economic problem of having seemingly unlimited human wants in a world of limited resources. People have a never ending desire for more goods and services but the resources available to produce them are limited

Question 16

Define capital

Answer 16

The machinery, plant and equipment made by people to assist in the manufacture of commodities and provision of services

Question 17

Define substitute product

Answer 17

I know tentative good or service that can be used for the same purpose and can replace one another.
Example Coke/Pepsi butter/margarine

Question 18

Define enterprise

Answer 18

The qualities some individuals possess to accurately perceive market opportunities and affectively coordinate the production process