economics

Law of supply

if price of chocolate increases the price of cocoa supply increases $$$

Law of demand

If the price of a cookie increases the demand for it decreases

if the price of a cookie decreases the demand for it increases

(price affected by supply/demand)

If demand increases…

it raises price/quantity

(price affected by supply/demand)

If demand decreases…

it lowers price/quantity

(price affected by supply/demand)

If supply decreases…

The supply would decrease meaning the quantity price INCREASES due to lack of supply

(price affected by supply/demand)

If demand increases…

It means low price of the quantity and MORE OF IT

What are determinants of supply/demand?

demand’s determinants…

consumer tastes, if the price of a substitute decreases the demand for the OG decreases because the sub would be cheaper

same way around

What are determinants of supply/demand?

Supply’s determinants…

If theres increase in efficiency

taxation

price of goods

What are the four different Market Structures?

 Perfect competition, Monopolistic competition, Oligopoly, Monopoly

What is oligopoly’s relationship to their competition?

Competition is strategic; firms are interdependent, often leading to intense non-price competition or, sometimes, collusion to manage prices

What is monopoly’s relationship to their competition?

There is no direct competition,

What is Perfect competition relationship to their competition?

Firms are "price takers," meaning they have no control over price and competition is based purely on cost efficiency.

What is Monopolistic competition, relationship to their competition?

Competition is high, relying heavily on advertising and non-price competition.

What are the characteristics of Oligopoly?

• A few large firms dominate (high concentration), similar or identical products, high barriers to entry, high interdependence (strategies, prices, and marketing are linked).

• Example: Automobile industry, soft drinks, airline industry.

What are the characteristics of monopolistic competition?

• Many firms, similar but differentiated products (branding, quality), low barriers to entry/exit, some price control.

• Example: Retail clothing, restaurants, beauty salons.

What are the characteristics of perfect competition?

• Many small firms, identical products, zero barriers to entry/exit, complete information, price takers.

• Example: Agricultural markets (e.g., wheat, corn).

What are the characteristics of Monopoly/

• A single seller, unique product (no close substitutes), extremely high barriers to entry, total price control (price setter).

• Example: Public utilities (electricity, water

What are externalities?

Externalities are something out of our control.

How does the Government involve themselves with positive and negative externalities?

 The government wants to solve negative externalities. So the government gives help with, for example giving tax refunds for kids. And providing schools. The government helps with regulations. 

What are the four roles of government in the economy?

Protector, regulator, consumer, provider

What are the two principles of taxation?

Ability to pay principle and benefits received

What is the ability to pay principle?

Those who are able to pay taxes, some criteria would be having a job

What is the benefits received principle?

 Paying taxes for a lottery, or paying from a benefit, paying for parking more, paying for public transport

What can good tax be used for?

Roads and schools

What is a Provider (roles of gov)

 Paying taxes for a lottery, or paying from a benefit, paying for parking more, paying for public transport, 

What is a protector? (roles of gov)

Enforces contracts, protects property rights, and sets rules to protect consumers and the environment.

What is a regulator? (roles of gov)

Sets rules and standards to ensure fair competition, prevent monopolies, and correct negative externalities.

What is a consumer? (roles of gov)

Government spending and taxation heavily influence the economy, acting as a major buyer of goods and services

What are the three different tax structures?

Progressive tax, Proportional tax, Regressive Tax

What is a Progressive tax?

The tax rate increases as income increases (e.g., federal income tax).

Which tax structure does income tax use?

progressive tax structure. This is known because, as taxable income increases, higher portions of income are taxed at higher, graduated rates, shifting the tax burden to higher earners

What is a Proportional tax?

All individuals pay the same percentage regardless of income (e.g., some state income taxes).

What is a regressive tax?

The tax takes a larger percentage of income from low-income earners than from high-income earners (e.g., sales taxes, excise