Economics of the market 0.0 / 5 ? EconomicsEcon of the market key termsOtherSQA Created by: samadhi14Created 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 1 of 28 What is supply? Supply is the amount of goods and services a business is able to supply at any given price 2 of 28 What are needs? Something that is essential for survival eg. food and shelter 3 of 28 What are wants? Something you believe will enhance your life but is not essential for survival 4 of 28 What is scarcity? Wants are unlimited but resources are finite this creates the basic economic problem of scarcity 5 of 28 Why do we have to make choices? Something every person needs to make because income and resources are limited 6 of 28 What is Opportunity Cost? The benefits forgone of the next best alternative 7 of 28 What are the factors of production? Land, labour , capital and enterprise 8 of 28 Land? The natural resources extracted from the earth. 9 of 28 Labour? The manual work efforts used to produce a product 10 of 28 Capital? The manmade resources used to manufacture the product 11 of 28 Enterprise? The person who organises all the other factors 12 of 28 What is spending? Giving money to spend on goods and services to fulfill your needs and wants 13 of 28 What is total utility? The total satisfaction gained from consuming the product or service 14 of 28 What is marginal utility? The extra satisfaction gained from consuming an extra unit of that good or service 15 of 28 What is diminishing marginal utility ? As you consume more of a good or service you gain less satisfaction from it. 16 of 28 What are the determinants of demand? Population, price of substitute goods, income, fashion and trends 17 of 28 What is a substitute good? A good that can be used in place of another 18 of 28 What is a complementary good? A good that goes hand in hand with another 19 of 28 Why is the supply curve upward sloping? The supply curve is upward sloping because as price goes up suppliers are willing to supply more 20 of 28 Determinants of supply ? Technologies, subsidies 21 of 28 What is a market? A situation were buyers and sellers come together to exchange goods and services for money 22 of 28 What are fixed costs and give examples? Costs that don’t vary no matter the output eg rent and insurance 23 of 28 What are variable costs and give examples? Costs that change depending on the output eg. Cost of materials, piece rate 24 of 28 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 25 of 28 What are average costs and how do you calculate it? The cost to produce one unit. Calculated by:Total cost/output 26 of 28 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 27 of 28 What is average revenue and how do you calculate it? The income you receive from selling one product. Calculated by: Total revenue/number sold 28 of 28
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