FLVS Economics Module 1 DBA Review

How would you explain the difference between money and currency?

money is debit cards, gov bonds, and 401k’s while currency is a type of money like paper and coins.

Why is studying economics valuable?

I will make better choices as a customer and maybe seller in the future.

How does scarcity affect your life? Give specific examples.

it makes me think about the decision i make.

What factors affect supply and demand?

price inflations and deflations, whether or not suppliers can access substitute goods, consumer expectation

Should the government print more currency to help the poor?

Can ultimately hurt the economy and disproportionately affect those it was intended to help

What is your opportunity cost for being on the phone with me right now?

My cost would be that I could be hanging out with my friends or doing something else I enjoy.

Describe the slope and meaning of a demand curve.

Slope is the value that describes the direction of the line. A demand curve is a specific point on the curve that shows how much of the product is demanded at a certain price.

What happens to equilibrium price if supply increases?

The price decreases and the quantity increases

What are three characteristics of money?

durability, uniformity and scarcity

Demand (D)

is the "whole curve"—overall demand for a good or service at all prices.

Quantity demanded (QD), however, is a specific point on the curve, showing how much will be purchased at a specific price.

In a demand curve, an individual point on the curve shows how much of the product is demanded at a specific price. All of the points together, the entire curve, represent demand.

T Tastes and preferences Example: People prefer the Nike® shoe to other brands because of its use of newer technology. Demand increases—the curve shifts to the right.

R Related goods and services Example: The price of shoelaces quadruples. People decide to wear more sandals. Demand decreases—the curve shifts to the left.

I Income Example: The NBA® gives all players a huge raise, and now they can buy more shoes. Demand increases—the curve shifts to the right.

B Buyers, number of Example: The sports arena is closed for renovations and all games are moved to a different county. Fewer sports fans visit the Nike® store next to the arena, so there are fewer buyers demanding goods from that store. Demand decreases—the curve shifts to the left.

E Expectations of price Example: People hear that the price of Nike shoes will go up in the future. They buy more shoes now. Demand increases—the curve shifts to the right.

Supply (S) is the "whole curve," meaning the supply for goods and services at all prices. Quantity supplied (QS) is a "specific point" on the curve, showing how much will be produced at a "specific price."

R Resource: cost and availability Example: A major technology plant is destroyed and computer chips for gaming are unavailable for Nintendo® to use in production. Nintendo's® supply decreases—the curve shifts to the left.

O Other goods Example: The price of video monitors decreases. People are buying more monitors and may be tempted to get a new Nintendo® game system as well. Nintendo's® supply increases—the curve shifts to the right.

T Taxes, subsidies, and government regulation Example: The government doubles taxes on all parts used to manufacture Nintendo consoles in the United States. This causes Nintendo's® manufacturing costs to increase and lowers profitability. Nintendo's® supply decreases—the curve shifts to the left.

T Technology (productivity) Example: A new machine is developed that assembles the consoles in half the time causing Nintendo's® costs to decrease. Nintendo's® supply increases—the curve shifts to the right.

E Expectations of the producer Example: Nintendo® expects to have higher demand for its new console over the holiday season. Nintendo's® supply increases—the curve shifts to the right.

N Number of firms in the industry Example: Three other video game manufacturers go out of business causing less competition for Nintendo®. The market supply decreases due to fewer businesses in the industry—the curve shifts to the left.