term 1 Flashcards
how does an outward shift in the PPC occur
the invention of new technology, the discovery of natural resources, and the increased labour force
calculation of PED
% change in QD / % change in price
inward shift in the PPC
depletion of natural resources, low investment in new technologies, natural disasters
mixed economy
an economy composed of the private and public sector
economy
an area where people and firms produce, trade, and consume goods and services
% change calculation
new - old/ old (x100)
factors that cause shifts in the supply curve
- the cost of production
- resources available
- technological changes
- subsidies
micro and macroeconomics
micro - study of individual markets
macro - study of entire economy
market
any set of arrangements that brings together all producers and consumers to engage in the exchange of goods and services
resource allocation
the way in which economies decide what goods and services to provide to solve the three economic questions
unitary price elastic demand
when the % change in price is directly proportional to the percentage change in demand. PED = 1
price inelastic demand
when the % change in price brings a less than proportionate % change in quantity demanded. PED < 1
revenue (definition and calculation)
amount of money a firm/producer generates from sales. quantity sold x price
planned economy
an economic system where the government makes crucial decisions. land and enterprise are state-owned and resources are allocated by directives (state instructions given to state-owned enterprises)
market economy
an economic system where consumers determine what is produced. resources are allocated by the price mechanism and land and capital are privately owned.
