Economics of the market

  • Created by: samadhi14
  • Created on: 13-03-18 09:38
What is demand?
Demand is the amount of goods or services consumers are willing to buy at any given price
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What is supply?
Supply is the amount of goods and services a business is able to supply at any given price
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What are needs?
Something that is essential for survival eg. food and shelter
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What are wants?
Something you believe will enhance your life but is not essential for survival
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What is scarcity?
Wants are unlimited but resources are finite this creates the basic economic problem of scarcity
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Why do we have to make choices?
Something every person needs to make because income and resources are limited
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What is Opportunity Cost?
The benefits forgone of the next best alternative
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What are the factors of production?
Land, labour , capital and enterprise
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Land?
The natural resources extracted from the earth.
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Labour?
The manual work efforts used to produce a product
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Capital?
The manmade resources used to manufacture the product
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Enterprise?
The person who organises all the other factors
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What is spending?
Giving money to spend on goods and services to fulfill your needs and wants
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What is total utility?
The total satisfaction gained from consuming the product or service
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What is marginal utility?
The extra satisfaction gained from consuming an extra unit of that good or service
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What is diminishing marginal utility ?
As you consume more of a good or service you gain less satisfaction from it.
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What are the determinants of demand?
Population, price of substitute goods, income, fashion and trends
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What is a substitute good?
A good that can be used in place of another
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What is a complementary good?
A good that goes hand in hand with another
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Why is the supply curve upward sloping?
The supply curve is upward sloping because as price goes up suppliers are willing to supply more
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Determinants of supply ?
Technologies, subsidies
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What is a market?
A situation were buyers and sellers come together to exchange goods and services for money
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What are fixed costs and give examples?
Costs that don’t vary no matter the output eg rent and insurance
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What are variable costs and give examples?
Costs that change depending on the output eg. Cost of materials, piece rate
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What are total costs and how do you calculate it?
Total cost is the total cost to manufacture a product. It is calculated by: fixed costs+variable costs
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What are average costs and how do you calculate it?
The cost to produce one unit. Calculated by:Total cost/output
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What is total revenue and how do you calculate it ?
The total amount of income you receive from selling the item before deducting any other costs. Calculated by: Number sold x price
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What is average revenue and how do you calculate it?
The income you receive from selling one product. Calculated by: Total revenue/number sold
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Other cards in this set

Card 2

Front

What is supply?

Back

Supply is the amount of goods and services a business is able to supply at any given price

Card 3

Front

What are needs?

Back

Preview of the front of card 3

Card 4

Front

What are wants?

Back

Preview of the front of card 4

Card 5

Front

What is scarcity?

Back

Preview of the front of card 5
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