Studied by 31 people
Looks like no one added any tags here yet for you.
price of products
Because of a great demand for certain products, what rises significantly?
Supply
the amount of goods and services business firms are willing and able to provide at different prices
law of supply
this holds that the higher the price buyers are willing to pay, other things being held constant, the greater the quantity of a product a firm will produce and that the lower the price consumers are willing to pay, the smaller the quantity the supplier will produce
supply schedule
a table to show the price and quantity supplies
supply curve
the information contained in a supply schedule could be more useful when it is plotted on a graph called this
positively sloped
How is a supply curve sloped?
increase in supply
When a supply curve moves to the right, what does that mean?
decrease in supply
When a supply curve moves to the left, what does that mean?
greater quantities of product
As the price consumers will pay rises, suppliers become more willing to provide what?
change in quantity supplied
This occurs whenever a change in the price consumers are wiling to pay causes a change in the number of goods produced and sold
decrease in supply
a leftward shift indicates this situation, in which suppliers produce less of their product at any given price
increase in supply
a rightward shift of the supply curve, which demonstrates the willingness of the business firms to produce more of their product at any given price
Changes in Technology
Changes in Production Costs
Changes in the Price of Related Goods
What are the three reasons for change in supply?
the increased use of computerization and automated production machinery
What does a change in technology mean?
If a firm’s costs rise, it must decrease the quantity of what it provides at the same price.
What does a change in production cost mean?
As the price people are willing to pay for a substitute rises, business firms naturally become willing to sell more of that good or service. To devote more resources to the higher priced substitute, firms will decrease their supply of the original good.
What does changes in the prices of related goods mean?
market equilibrium point
the critical intersection point at which both parties agree
market equilibrium price
the price at which supply and demand meet
fluid
The market equilibrium price is _________.
surplus
an excess of unsold products; this is the upper part of the intersection of a demand and supply curve
storage, security, insurance, spoilage, loss of income while the product is sitting idle, and interest costs on financing
What are examples of carrying costs?
increase demand, decrease supply, or allow the price to fall to the market equilibrium point
What are three solutions to surplus?
price floor
When the government purchases surplus commodities to raise their prices, it establishes this, a barrier intended to prevent the prices of those items from falling below the market price
shortage
this occurs whenever various factors hold the price of a good lower than its market equilibrium price
price ceilings
mandates that prevent prices from rising to the market equilibrium price (example are rent-control laws)
decrease demand, increase supply, or allow the price to rise to the market equilibrium point
What are three possible solutions to a shortage?
-low level of unemployment
-stable price level
-a healthy rate of economic growth
-a fair distribution of income
What are the four primary goals of nations?
unemployment
exists when someone who wishes to work cannot find a job
increased levels of poverty, crime, and despair
High unemployment often coincides with increases levels of this.
economic disruptions due to unpredictability
Fluctuations between periods of inflation and deflation cause this.
the nation’s overall economic activity slows significantly
The instability in prices causes what?
economic growth
this refers to an increase in the quantity of goods and services a nation can produce
extensive growth
in this period, business firms are able to increase their production of goods and services because they have more land, labor, or financial capital available to them
intensive growth
during these times, a nation’s business firms increase their production of goods and services by using their existing factors of production with greater efficiency
a nation must develop alternative resources
Why is intensive growth important?
The output question: What will the nation produce?
The input question: How will the nation produce its goods?
The distribution question: Who will receive what the nation produces?
What are the three economic question?
consumer goods
those that individuals purchase for personal use, such as books, clothing, coffee, and school supplies
capital goods
goods that firms use to produce consumers goods, also known as real capital
consumer goods and capital goods tradeoff
Since a nation cannot produce everything its people desire, it must address this and have a good balance of this
they put into financial institutions is then lent to businesses to purchase real capital
When people spend money, they buy consumer goods. In a sense, when people save, the “buy” capital goods because?
command economy
In this, a powerful individual or a committee answer the there economic questions; policymakers decide the proportion of consumer goods to capital goods and the specific items it will manufacture
market economy
in this, private individuals make the decisions that answer the three economic questions, and they do with such an ease that it causes observers to marvel
market interest rate
the central component for the market prices is what?
labor intensive
If a firm takes this approach, it relies more on human labor than real capital
capital intensive
If a firm takes this approach, it uses more automated equipment than human labor
egalitarian fairness
this policy maintains that each person in a national has the right to a part of that nation’s wealth simply because he is part of the human race
economic leveling
Some egalitarians argue in favor of this, which equally distributes the nation’s pool of wealth to all its citizens regardless of what any individual has contributed to the pool
taxes
Those who support the command solution frequently view what as the solution to redistribute the nation’s wealth?
libertarian fairness
this argues that the only economic right in which a nation should entitle its citizens is the right to own and use property
“economic Darwinism”
another name for libertarian fairness
natural disasters, slothfulness, lack of skills and mismanagement, warfare, corrupt governments and self-serving employers
What are causes for a person’s poverty?
Note
Flashcard