Economics and Society Flashcards
What is the equilibrium?
Where producer supply equals consumer demand.
What are the three economic questions?
- What to produce?
- How to produce?
- For whom to produce?
Define needs.
Needs are items and things that ate necessities of life. These are things that you need to live a healthy life.
Define wants.
Wants are things that we can live without but they make us enjoy life more. We don’t need these things to survive.
State the law of demand.
The law of demand states that the higher the price of a product, the less of it consumers will buy. As price decreases, consumers will buy more.
State the law of supply.
The law of supply states that producers supply more at a higher price because selling a higher quantity at a higher price increases their revenue.
Define consumer sovereignty.
The situation in an economy where the desires and needs of consumers controls the outputs of producers. The consumers get what they want.
Discuss opportunity cost.
Opportunity cost is the lost alternative use to which the economic resources could have been allocated. When making choices, one must be given up and the ones given up is the opportunity lost.
Define economics.
Economics is the study of how individuals and groups make decisions about our limited resources so as to best satisfy needs and wants.
Define market.
A market is actual or nominal place where producers and consumers come into contact and there is a means of exchange. It is a place where forces of demand and supply operate.
What are some differences between needs and wants?
Needs are things that are necessary in life to live a healthy life whereas wants are things in life that we can live without but give us enjoyment. They are not needed to survive.
Discuss relative scarcity.
Relative scarcity describes the imbalance between our wants and our resources which are limited. Scarcity means we do not have enough resources to satisfy our needs and wants.
What are complementary and substitute products?
Complementary products are ones that are purchased in conjunction with other products. An example could be a roast with roast vegetables. Substitute products are different goods that partly satisfy the needs of a consumer and therefore can be used to replace another product.
What are some factors of demand?
Some factors of demand consist of advertising, change of weather, increase in income, consumer trends, positive/negative publicity and expectations.
What are factors influencing supply?
Availability of resources - available land and labour, natural disasters, new discoveries of raw materials
Cost of new materials - wage increases, price increases of parts and fuel, interest rates increase/decrease
Efficiency of production - new production methods, staff training, new machinery and technology
