Economics Flashcards
What is economics
Economics is the social science that studies the production, distribution, and consumption of goods and services
What is relative scarcity
Relative scarcity describes a situation where a resource is limited in supply, compared to demand. Oil is an example of a product with relative scarcity, as its supply is limited.
What is opportunity cost
Opportunity cost refers to what you have to give up to buy what you want in terms of other goods or services.
What is an economic resource/factors of production
They are the resources that are used to create goods or services. 4 factors of production consist of Land/Natural, Labor, Capital & Entrepreneurship.
Example of Land factor
Natural resources such as water, wool etc
Example of Labor factor
The effort and skills of people who work to produce goods and services. eg: Workers
Example of Capital Factor
Refers to the tools and machinery used to produce the goods and services: eg: Sewing machines
Example of Entrepreneurship factor
It’s combining all three main factors to create a profit
Markets
A market is a composition of systems, institutions, procedures, social relations or infrastructures whereby parties engage in exchange.
What is Economy
Economy is the system of production, distribution, and consumption of goods and services in a society, and the study of how individuals and institutions allocate resources to satisfy their needs and wants.
Types of economic systems
The three main types of economic systems are market economy, command economy, and mixed economy.
Three economic questions
What to produce? How to Produce? For whom to produce?
Law of Demand
The law of demand states that as the price of a good or service increases, the quantity demanded of that good or service will decrease, all other factors being equal.
Law of supply
The law of supply states that as the price of a good or service increases, the quantity supplied of that good or service will increase, all other factors being equal, and vice versa.
Market Economy
In a market economy, the production and distribution of goods and services are primarily determined by the interactions of buyers and sellers in the marketplace.
