Random Flashcards
(34 cards)
What factors affect the price elasticity of supply
Time
Raw materials need to be found
Availability of stocks
Ease of switching to alternative forms of production
Availability of spare capacity
Number of firms in the market (ease of entry)
Ability to alter production methods
What are the determinants of supply
Price of raw materials Tech improvements Changes in labour productivity Regulation and Bureaucracy Wage rates Subsidies Indirect taxes Expectations about future prices Objectives of firms Number of sellers
What is the equation for price elasticity of supply equation
%∆ quantity supplied
_____________________
%∆ price
Cross PeD equation
%∆QD Good A
_______________
%∆P Good B
What is the equation of Income Elasticity of Demand
%∆ QD
________
%∆ Income
PeD Equation
%∆QD
________
%∆P
Disadvantages of price floors?
Surplus of the good Inefficient use of scarce resources Expensive to enforce Black market Implies equilibrium is known Size of change determines effectiveness
What ve does a complementary good have?
Negative -ve
What ve does a strong or weak substitute have?
Strong substitute= big +ve
Weak substitute= small +ve
What is disequilibrium?
The price at which the market supply does not equal demand
There is likely to be a further change or reaction by buyers or sellers
What is excess supply?
When quantity supplied at a particular price is greater than quantity demanded
What is a commodity
A good that is traded but usually refers to raw materials or semi manufactures goods that are traded in bulk
Often they are unbranded goods (homogeneous) where all firms products are indistinguishable from each other.
What is typical of agriculture
Prices are volatile External effects (drout, flood, pests)
What is equilibrium?
The price at which demand is equal to supply and there is no tendency to change
What does the term factors of production mean?
inputs into the production process, such as land, labour, capital and enterprise
What does the term capital good mean
A good which is used in the production of other goods or services, also known as a producer good
What does the term production mean
A process or set of processes, that converts inputs into output of the goods
What is economic welfare?
The economic well being of an individual, a group within a society, or an economy
What is a positive statement?
A statement of fact that can be scientifically tested to see if it is correct or incorrect
What is a normative statement?
A statement that includes a value judgement and cannot be refuted just by looking at the evidence. It cannot be scientifically tested.
What is the difference between a need and a want?
A need is something that’s necessary for human survival. A want is something that is desired.
what’s the definition of opportunity cost?
the cost of giving up the next best alternative
What is the fundamental economic problem?
How best to make decisions about the allocation of scarce resources among competing uses so as to improve and maximise human happiness and welfare
What is a ppf and definition
production possibility frontier, a curve depicting the various combinations of two products (of types of products) that can be produced when all the available resources are fully and efficiently employed
