ECO EOYT

demand

is the quantity demanded of a good or service that consumers are willing or able to produce

Law of demand

as the price of a product falls, the quantity demanded will increase ceteris paribus

supply

is the willingness and ability of producers to produce a quantity of a good or service at a given price in a given time period

law of supply

an increase in the price of a good or service that increases the quantity produced ceteris paribus

Determinants of Demand

income effect, substitution effect, change in income, changes in taste and style or trends, size, population and age

determinants of supply

indirect taxes, subsidies, weather and natrual disasters

opportunity costs

the next best alternative that is foregone when an economic decision is made, the loss of other alternatives when one alternative is chosen.

scarcity

resources are finite and in limited supply , something is scarce when it is both desirable and limited.

factors of production

land, labour, capital, entrepreneurship

efficiency

how well an economy or entity uses its resources to produce goods or services, maximising output and minimising waste

opportunity costs are related to scarcity

as wants are unlimited yet the resources to produce those goods and services are limited, therefore people must choose.

surplus

where quantity supplied exceeds quantity demanded

consumer surplus

difference between the maximum price a consumer is willing to pay for a good or service and the actual price they pay

producer surplus

amount producers benefit from by selling at a market price higher than the least they are willing to sell for

interdependance

countries depend on each other due to specialization, creates global connections and vulnerability to shocks, as no country is self sufficient

specialization

is focousing on the production of one good or service to increase efficiency and output yet requires reliable trade for other goods

sustainability

meeting current needs without harming future generations, this is done by balancing economic, social and environmental goals in trade to avoid overexploitation of resources

comparative advantage

a country has this if they can produce a good at a lower opportunity cost, is a basis for mutually beneficial trade

protectionisim

when a country takes action to limit foreign competition to help its own economy.

examples of protectionisim

Tarriffs- a tax that the government charges on imported goods, makes foreign goods more expensive and encourages people to buy local goods

free trade

trade without barriers offers more choices, lower prices, competition and innovation. yet can harm local industries and increase inequality