LESSON 1-MIDTERM Flashcards
one who demands goods and services. Without consumption (_______), there is no need for production (________).
-Consumer
-Household
-Firm
is the king in a capitalist or free-market economy.
consumer
refer to anything that provides satisfaction to the needs, wants, and desires of the consumer. They can be any tangible economic products (like cars, books, clothes, etc.) that contribute directly (final goods) or indirectly (intermediate goods) to the satisfaction of human needs and wants.
Goods
on the other hand, are any intangible economic activities (such as hairdressing, catering, insurance, banking, telecommunications, etc.), that likewise contribute directly or indirectly to the satisfaction of human wants.
service
These are the goods that yield satisfaction directly to any consumer. These goods are primarily sold for consumption, and not to be used for further processing or as an input/raw material needed in producing another good. Usually, these are the goods that are easily accessible to consumers (e.g. soft drinks, bread, crackers, cellular phone loads).
Consumer goods
goods that satisfy the basic needs of man. In other words, these are goods that are necessary in our daily existence as human beings. These are also goods that we cannot live without such as food, water, shelter, clothing, electricity, medicine, etc.
Essential or necessity goods
are those which men may do without; but which are used to contribute to his comfort and well-being. Examples of ______ goods are private jet, yacht, luxury cars, perfumes, jewelry, etc.
luxury goods
An___________ is that which is both useful and scarce. It has value attached to it and a price has to be paid for its use. If a good is so abundant that there is enough of it to satisfy everyone’s needs without anybody paying for it, that good is free.
economic good
Water from our faucet is an __________, because we are not utilizing it for free, we have to pay to its distributor. The air that we breathe and the sunlight coming from the sun are examples of free good.
Economic good
are the choices made by us consumers as to which products or services to consume.
Preferences
identifies the basic priorities of every consumer.
Maslow’s hierarchy of needs
These are the basic needs for sustaining human life itself, such as food, water, warmth, shelter, sex and sleep. According to Maslow, until these needs are satisfied to the degree necessary to maintain life, other higher needs will not stimulate people.
Physiological needs
These are the needs to be free of physical danger and the fear of losing ones work, property, food, or shelter.
Safety needs
These needs cover the value of the sense of belongingness, love, care, acceptance and understanding of family, relatives and friends, and to be accepted by others.
Social needs
These needs explain the importance of self-esteem, recognition, status of an individual and the general acceptance of the society to an individual. This kind of need produces such satisfaction as power, prestige, status, and self-confidence.
Esteem needs
These needs explain the worth of a person’s self-development, growth and realization and achievement. According to Maslow, this is the highest need in the hierarchy. It is the desire to become what is capable of becoming - to maximize one’s potential and to accomplish something.
• Self-actualization needs
These needs explain the worth of a person’s self-development, growth and realization and achievement. According to Maslow, this is the highest need in the hierarchy. It is the desire to become what is capable of becoming - to maximize one’s potential and to accomplish something.
• Self-actualization needs
is a measure of the welfare we gain from the consumption of goods and services, or a measure of the benefits that we derive from the exchange of goods.
consumer surplus
is the difference between the total amount that we are willing and able to pay for a good or service and the total amount that we actually pay for that good or service.
consumer surplus
refers to any economic activity, which combines the four factors of production to form an output which will give direct satisfaction to the consumer.
production
are commodities and services that are used to produce goods and services.
Inputs
are useful goods and services that result from the production process.
Outputs
factor inputs are those whose quantities can be changed in response to changes in output. Examples include electrical power consumption, transportation services, and most raw material inputs.
Variable Input
factor of production is one whose quantity cannot readily be changed. Examples include major pieces of equipment or suitable factory space
Fixed Input
is the time period during which at least one of the factor inputs used in the production process is fixed.
Short Run
is the time period during which at least one of the factor inputs used in the production process is fixed.
Short Run
is the time period after which all the factor inputs used in the production process are variable
long run
refers to the amount of output a firm can get from the resources it employs
Productivity
of an input is the extra output produced by one additional unit of input.
Marginal Product
is the average amount of output per unit of input (labor).
Average Product
refers to all expenses acquired during the economic activity or the production of goods and services.
Cost/theory of cost
are costs that are spent for the use of fixed factors of production. These expenses do not change regardless of a change in quantity of output produced.
Fixed Cost
are expenses which change as a consequence of a change in quantity of output produced. Examples are labor and raw materials.
Variable Cost
is the additional cost of one unit of product.
Marginal Cost
An increase in the quantity of factor inputs will lead to an increase in output. The _________________ is the study of how the output level changes as the quantity of factor inputs changes. To increase output, firms need to employ more factor inputs which will lead to an increase in costs.
theory of production
shows all combination of factors that produce a certain output
- isoquant
show all combinations of factors that cost the same amount.
isocost
can show the optimal combination of factors of production to produce the maximum output at minimum cost.
isocost and isoquants
is usually shaped concave because of the law of diminishing returns. With fixed capital employing extra workers gives a declining increase in the marginal product (MP)
isoquant
