Needs Vs Wants Flashcards
What is the difference between a need and a want?
A need is a product that is required for an individual to survive life. Wants on the other hand are products that are desired but do not need to be acquired for an individual to live. Wants are desired to improve the quality of an individual or groups daily life. Both needs and wants are desired in the market.
What is a market?
A market is a platform where potential buyers and potential sellers meet and there is a potential for an exchange to occur.
Eg- house market or stock market
What are characteristics of a producer?
- Aim to make a profit
- Maximise profit through the efficient use of resources.
What are characteristics of a Consumer?
- Unlimited needs and wants
- Affluenza (cannot be satisfied)
What is the fundamental economic problem?
The basic economic problem of scarcity acknowledges that needs and wants are unlimited and also that there are only limited resources to satisfy these desires. The solution to this problem lies in allocating the resources to best suit the most needs and wants.
What is the oppurtunity cost?
The oppurtunity cost is the cost created when a consumer or producer has to choose between different options. The oppurtunity cost is the lost value and benefit from the options you go without.
Eg- if choosing between steak and pasta and choose pasta, lose a delicious steak meal
What is the price mechanism?
The price mechanism is the relationship between the producer and the consumer and how they work together to set the prices for goods and services.
Explain how the law of demand works?
The law of demand states that as the price of a good or service increases the demand for that product decreases. Likewise, as the the price of a good or service decreases, demand for that item increases.
Explain the law of supply
The law of supply states that the producer is more willing to supply products at higher prices , and less willing to supply products at lower prices. The quantities supplied are a direct reference to the market price.
What is the equilibrium price point?
The equilibrium price point is the point at which demand meets supply. It is the ultimate price point for both demand and supply. If either the supply or the demand is affected the price point will shift and a new price will be found.
What does scarcity lead to?
The fundamental economic problem of scarcity creates three basic economic questions.
What to Produce?
Consider consumer sovereignty, where is there demand?
For whom to produce?
Whoever can pay the market price, consider employees and who benefits from the production of the product.
How to produce?
The most efficient method? Consider business ethics.
What are some demand factors?
Other than price.
What makes a consumer willing or less willing to pay?
-price of complementary products
Coffee pods are too expensive.
- expectations
iPod is soon to be released, don’t buy MP3 now.
- income
Can’t afford to pay, more income = more demand
- Substitute products
If the price of a Samsung increases, demand for cheaper iPhones will increase.
-Environmental
If Cold, more demand for heaters.
-Consumers Tastes and personal preferences.
If celebrity endorses a product there will be more demand for it,
What are some factors that increase or decrease a suppliers willingness to supply a product?
Other than price
-Price of Inputs
If steel costs more, less willing to make steel bins as profit is less.
- Competitors Prices.
If competitors prices are really low, less willing to supply, as will have to compete.
- expectations
If they know iPod is to be released, more willing to supply now as soon will not be able to.
Define the economic resource Land,
This refers to natural resources such as fertile pastures, oceans and mineral reserves. Australia is abundant in natural resources, excluding water.
Define Labour resource
This is the people power available to provide a service, like a masseur, or factory worker.
