Economics Flashcards
Define Ecomomics
Economics is the branch of knowledge concerned with the production and consumption and transfer of wealth. It can also be making choices to achieve an objective. Eg. Profit.
Define consumer sovereignty
Consumer sovereignty is the power of consumers to decide what goods and services are produced. This suggests that consumers, not producers are the best judge of what products benefit them.
Define market
An actual place where the forces of demand and supply meet to operate. It’s where both buyers and sellers meet to trade goods and services for money.
Define opportunity cost
Opportunity cost is something that must be given up in place of something else. In getting what you want you miss out on another alternative. For example, having a glass of coke or fanta with your meal.
What are the 3 economic questions
How to produce?
What to produce?
For whom to produce?
What is a need VS a want
A need is an essential item that one requires to survive. Such as water food, shelter and clothing. A want is a good or service that is not a requirement in order to survive. Eg a phone, books, makeup.
What are the 4 economic resources.
Land - natural resources that come from the earth such as coal, wood and crops.
Labour - the person who does the actual work in the production process such as an employee, a chef or a builder.
Capital - the tangible items and buildings that the products are produced in. Such as factores, stores, kitchens
Enterprise - the person who comes up with the initial idea. “The big thinker” people like entrepreneurs, CEO’s innovators
What is the law of supply
The law of supply states that an increase in price results in an increase in the quantity supplied. However, other factors can influence the willingness and ability of a supplier to supply the goods and services.
Factors that impact supply
Price of imputs land labour capital etc
Price of other products
It’s price
Law of demand
The law of demand states that consumers are more willing and able to buy a product the cheaper it is. Other affecting factors can include, price of substitutes and complementary, preferences, income
What is the equilibrium
The price where consumer demand equals the supply of goods and services. On a graph is is where the two curves intersect.
What is scarcity
Scarcity is the issue of limited resources being able to satisfy unlimited wants. In other words wanting something but not having the resources to do so. An example of scarcity would be, if you grew your own wheats and you only had enough plant to make 2 loaves of bread, when you wanted to make 5.
What is complementary product
Complementary products is a material or good whose use is related to the use of another. A demand in one if these products usually results in the demand of the other. Such as shampoo and conditioner.
What is a substitute product
A substitute product is an alternative good that can be used for the same purpose. Such as fast food restaurants like McDonald’s and KFC
What are the different types of markets
Oligopoly - two or or more firms who dominate the market place. Such as Coles and woollies.
Monopoly - only one producer/seller for a product who get all the marketshare. Such as AFL, PTV, MYKI
Perfect market - the type of market who has many buyers and sellers. All firms sell similar products such as a green grocer at the QVM.
