Supply And Demand Flashcards
What does land as a factor of production include?
All natural resources not created by people, such as air, water, plants, sunlight, rocks, and minerals.
Land encompasses everything in the universe that is not man-made.
What is the definition of tangible?
Made of physical matter and can be seen and touched.
Tangible items are those that have a physical presence.
What is labor in the context of factors of production?
The human mental and physical effort used to turn natural resources into goods or services.
Labor is essential for transforming raw materials into usable products.
How is capital defined in the factors of production?
Tangible goods of value created by labor.
Capital includes machinery, tools, and buildings used in production.
What is entrepreneurship sometimes categorized as?
One of the main factors of production.
There is debate about whether entrepreneurship should be grouped under labor.
What does elasticity of demand measure?
How much the price of a product affects the demand.
Elasticity indicates consumer responsiveness to price changes.
What characterizes elastic demand?
Increases or decreases based on changes in the price of a good or service.
Elastic demand is sensitive to price fluctuations.
What is inelastic demand?
Stays about the same no matter the price of a good or service.
Inelastic demand indicates a lack of sensitivity to price changes.
How does competition affect elasticity?
Increases elasticity by providing more choices and substitutes.
More options make it easier for consumers to switch to lower-priced alternatives.
What happens if the price of a product takes up only a small percentage of the consumer’s income?
The consumer won’t care as much if the price changes.
Low-cost items are less likely to impact consumer spending behavior.
What influences a consumer’s willingness to pay for a product?
Belief in the necessity of the product or service.
If consumers feel they need an item, they may pay any price for it.
What effect does the duration of a price change have on elasticity?
It affects elasticity; initial price drops may lead to increased purchases.
Consumers may react more strongly to temporary price changes.
Fill in the blank: The elasticity of demand is influenced by _______.
[various factors, including competition, necessity, and percentage of income spent].
These factors determine how responsive demand is to price changes.
