Econ sem 1 yr 11

Semester 1 economics definitions

Opportunity cost

The best forgone option when making a choice.

Ex. Being at school on a hot day when you could be at the beach.

Law of Demand

As cost increases the demand decreases, as cost decreases the demand increases.

Law of supply

As cost increases the supply increases, as cost decreases the supply decreases.

Non-price factors of demand

The curve shifts left or right when a non-price factor changes.

Examples:

• Levels of disposable income

• Tastes and preferences of consumers

• Price of related goods

• Consumer expectations regarding future prices.

Non-price factors of supply.

The curve shifts left or right when a non-price factor changes.

Examples:

• Cost of production

• Prices of related goods

• Technology

• Expectations of producers

• Avaliablility of resources.

Price elasticity

A measure of the responsiveness if the quantity demanded to a change in the price of a good or service.