ECON 1st test

scarcity

limited nature of resources (if something is limited and wanted)

factors of production (definition and form of payment)

• land

  • natural resources, payment = rent

• labor

  • workers, payment = wages

• capital

  • physical: machinery + equipment to produce a finished good

  • human: skillsets, intellect, ability, and capability

  • financial: payment = interest

economics

how people allocated limited resources to satisfy nearly unlimited wants

supply and law of supply

actual amount of a good/service producers are willing to sell at a specific price

price and quantity of a good will be positively correlated

• higher price = more supply

supply curve and TRICE

• graph representation of supply in a competitive market → relationship between quantity supplied and price

TRICE — factors that shift supply curve

• technology

  • better tech = increase in supply and vise versa

• related prices

  • complements = things made at the same time (ex. bi products like pig meat and manure)

  • substitutes = co-produced goods, if a price of 1 increases the other will decrease

• input prices

  • anything used to produce a good/service including nominal wages

    • (increase in input prices = decrease in supply)

• competition

  • number of producers in a market — increases quantity of the overall market when there are more firms

• expectations

  • if you expect popularity in your supply you will produce more of it

short vrs long term shifts in supply curve

demand

• actual amount of a good/service consumers are willing and able to buy to some specific price

micro/macroeconomics

micro

• study of individual units that make up economy

macro

• study of overall aspects and workings of an economy (inflation, growth, employment, interest rates, productivity, etc.)

incentives

positive incentives

negative incentives

direct/indirect incentives