What is a firms main objective in terms of supply?
To maximize profits.
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What to resources and humans have a nature of?
Humans have a nature of unlimited wants, however our resources are not unlimited.
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What are the 4 factors of production?
Land, Labour, Capital and Enterprise.
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What are the 3 fundamental questions in terms of choice?
What to produce, how to produce and for whom.
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Whats the difference between free markets and central planning?
Firms/customers decide in free markets and central planning is done by the government deciding.
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What is market equilibrium?
Market is at equilibrium when quantity demanded is equal to quantity supplied.
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What is the law of supply?
All else equal, the higher the price of the good, the higher the quantity supplied, and the lower the price of the good, the lower quantity supplied.
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What causes a supply curve to shift?
Cost of raw materials and labour, technology advancement, natural disasters, profitability of substitutes in supply.
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What is production efficiency?
Using all possible resources.
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What is price discrimination?
Charging different prices to different buyers for an identical good or service to maximize profits.
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Name the 3 pre-conditions for price discrimination.
1) Firms must have control over its price, 2)Firms must be able to identify different groups of people who can pay different prices & 3) Resale of the good is prohibited.
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What are the 3 degrees of price discrimination?
1st degree - Charge each customer exactly what they are willing to pay, 2nd degree - charge customers different prices depending on the quantity they buy and third degree - charge different 'groups' of consumer different prices.
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Other cards in this set
Card 2
Front
What to resources and humans have a nature of?
Back
Humans have a nature of unlimited wants, however our resources are not unlimited.
Card 3
Front
What are the 4 factors of production?
Back
Card 4
Front
What are the 3 fundamental questions in terms of choice?
Back
Card 5
Front
Whats the difference between free markets and central planning?
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