INTRO TO ECON Flashcards
Q: Why does the economic problem exist?
It exists because society has limited resources but unlimited needs and wants.
What are the three fundamental questions that markets must answer?
What goods and services will be produced and how many?
How will the goods and services be produced?
For whom will the goods and services be produced?
Give three examples of choices you made and the opportunity cost in each case.
(Example: Going to a movie instead of studying – opportunity cost is the lost study time.)
(For this one, add your personal examples when studying!)
What is scarcity and why does it occur?
Scarcity occurs when limited resources cannot meet unlimited wants and needs.
What is opportunity cost?
It is the value of the best alternative that you give up when making a choice.
What are the three key elements of a market?
Buyers (demand)
Sellers (supply)
Something to exchange (goods, services, or resources)
: What is a market?
A place where buyers and sellers exchange goods, services, or resources. Markets can be physical (like a supermarket) or non-physical (like the internet).
what is product market
Product Market: Consumers demand goods and services, and firms supply them (e.g., Coles selling groceries to households).
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what is facto market
Factor Market: Households supply resources (like labor) to firms, which demand these factors to produce goods and services (e.g., working at a company).
What are the four factors of production? Provide an example of each.
Land – Natural resources (e.g., a farm).
Labor – Human effort (e.g., a teacher’s work).
Capital – Tools and machinery (e.g., a factory).
Enterprise – Entrepreneurial skill (e.g., a startup founder).
How are markets classified?
By the level of competition and how easy or hard it is to enter the market.
What are the characteristics of a competitive market?
Large number of buyers and sellers
Firms are price takers (accept the market price)
Sell homogenous goods (e.g., fruit, clothes)
No barriers to entry or exit
What is a free good in economics?
A good that is not scarce and has zero opportunity cost.
Give examples of competitive markets.
Fruit shops, cafes, hair salons, small businesses.
What are the characteristics of a non-competitive market?
Small number of firms
Firms are price setters (control prices)
Product differentiation (unique products)
Barriers to entry (costs, technology, etc.)
