(CP) Economics and Personal Finance - Basic Economic Terms 3

cost & benefits

cost and benefits is a process that assesses the relation between the cost of an undertaking and the value of resulting benefits. 

opportunity costs

opportunity cost is the value of the best alternative when given limited resources. 

types of economies

 command economy is a system in which a central government sets levels of production and the terms of distribution and pricing. market economy is the system in which production and prices are determined by non-restricted competition between privately owned businesses. mixed economy is an economic system that combines private and public enterprise. 

3 economic questions

three economic questions are what to produce, how to produce and who to produce it for. These questions are answered by individual businesses and consumers.

factors of production

factors of production refer to the resources or inputs that are used to produce goods and services in an economy. 

circular flow model

product market is the marketplace where final goods or services are sold to households and the foreign sector. factor market is the cost of all the different inputs that are used in economic activity, such as raw materials, machinery, investments and labor. 

how supply & demand lead to price & quantity

supply and demand determine the price and quantity fo a good in a market by finding an “equilibrium point: where the quantity buyers want to purchase the good (demand) and it matches the quantity sellers are willing to produce( the supply)

supply shifters

supply shifters are the non-price factors that affect the quantity of a good that supplies are willing and able to sell at any given price. 

demand shifters

demand shifters are factors that cause a shift in the “demand curve” and they either curve to the right (showing increase) or to the left (showing decrease), without changing the price of the goods or service.

market strucures

a monopoly is a market structure that consists of a single seller or producer and no close substitutes. An oligopoly is a state of limited competition, in which a market is shared by only a small number of producers or sellers. monopolistic definition is a market structure where many companies sell similar but also distinct products. perfect competition