Economics And Society Flashcards
What to produce?
Consumer sovereignty: consumer is king when deciding what is produced
What is a Market
Where producers and consumers come into contact with and there is means of exchange
What is consumer sovereignty
The situation in an economy where the desires and needs of consumers control the output of producers
What is the concept of opportunity cost
An opportunity cost is the cost of an alternative that must be forgone in order to pursue a certain action
What is economics
The branch of knowledge concerned with the production, consumption and transfer of wealth
What are the 3 economics questions
What to produce?
How to produce?
For whom to produce?
Needs
Necessary for survival, water, food and shelter
Wants
Non essential items, likes toys, mobiles and computer games
Opportunity cost
The lost alternative use to which resources could have a been allocated. Because there is limited resources, choices have to be made
Scarcity
Economic problem whereby there is not enough resources to satisfy unlimited needs and wants
Resources
Land, capital, labour, and enterprise
Price mechanism
Where producer supply and consumer demand interact in the market to determine equilibrium price.
Equilibrium
Where producer supply equals consumer demand
Demand
Law of demand-Price and quantity demanded are inversely proportionate
As price rises the amount demanded will fall as less consumers will be willing and able to pay that price vice versa
Factors influencing supply
Availability- Available labour and land New discoveries of raw materials Natural disasters Cost- wage increases Price increases of parts and fuel Interest rates increase/decrease Efficiency- New production methods Staff training Reducing waste New machinery and technology
