study Flashcards
what is economics?
how business, governments, and other groups make decisions on how to use our limited economic reasources and how these decisions effect living standards
what is the law of supply?
when the price of an item increases, the quantity of that item that will be
supplied by producers will increase
capital recourses definition
man made products used for the goods and services
law of demand definition
As the price of an item decreases, the quantity of that item that will be
demanded by the market will increase.
how to produce?
to make more money, people who make things try to find the cheapest and fastest ways to do it, sometimes using machines instead of people.
what are needs
things people need to survive like food, water, shelter
what are land resources
rescources that occur naturally like water, oils and coal.
land resources definition
the raw materials in the production process
opportunity cost definition
The value of the lost alternative use to which the economic resources could have been allocated.
what are wants
unrealistic things like a holiday, luxury cars, phone
for whom to produce?
goods and services are received by those who can afford to pay for them. The government uses taxes to provide some goods and services for everyone such as healthcare and education.
what is Equilibrium Price?
The price at which the quantity producers are willing to supply exactly equals
explain Supply Factors - Costs of
Resources
Anything that reduces the costs of productions so that more money is
available for other resources
explain Supply Factors - Efficiency
in resource use
Anything that results in more efficient use being made of existing resources
explain Demand Factors - Price of
substitutes
An increase in demand for your product usually increases as
consumers switch to your product. For example, if the price of coffee
increases people may switch to drinking tea as a result
explain Demand Factors - Income
When a person’s income goes up, they are able to purchase goods
and services increasing demand. A fall in income reduces
consumer demand.
What and how much to
produce?
In Australia this is usually determined by consumer demand.
Producers, in business to make a profit will produce what consumers
want to purchase (consumer sovereignty.)
Markets
any situation where potential buyers interact with potential sellers
and there is a means of exchange. (A way of paying for goods and
services.)
Cost benefit analysis
involves making a list of the costs and benefits of each alternative proposal and comparing them to reach a conclusion
