The Market System (ch. 1-4)

Emigration

________: large numbers of highly skilled and qualified workers move overseas, reducing output.

Sales managers

________ may attempt to sell as much as possible individually, thus selling larger quantities and lowering prices, making profits negative.

PPC

When a point moves along the ________, an opportunity cost occurs because you could be producing a different amount of something else and get more of it.

Weather

________: droughts reduce agricultural capacity, reducing output.

Efficiency

Improved ________: new production methods developed, increasing output.

opportunity cost

The ________ is a sacrifice made when making a choice.

Demand Curve

demand can be shown graphically, on the _____________.

New Resources

________: some nations may find more resources, so they can produce more, thus increasing output.

New Technology

________: ________ is faster and more reliable in production, thus causing more output.

PPC

When the ________ shifts inwards, it means that there is negative economic growth.

Demand

________ is the amount of a good which is bought at given prices over periods of time.

Improved Efficiency

new production methods developed, increasing output

Education and Training

economy becomes more productive as the proportion of educated workers increases as they can comprehend tasks faster and increase output

New Resources

some nations may find more resources, so they can produce more, thus increasing output

Resource Depletion

running out of resources, reducing output

Weather

droughts reduce agricultural capacity, reducing output

Emigration

large numbers of highly skilled and qualified workers move overseas, reducing output

Wars and conflict

less production availability as fewer resources, reducing output

Influenced

consumers may be influenced by people such as friends or parents and adopt their buying habits

Demographic Changes

an example of a demographic change is an ageing population, where there is an increase in demand for retirement homes and holidays for the elderly

Advertising

firms may attempt to influence demand for their products through advertising and other forms of promotion

Income

when disposable income rises, demand for goods rises

Fashion and tastes

demand rises for things which are more fashionable and attractive at the time, however, these tastes change over time

Price of substitutes

a substitute good is a good which is bought as an alternative to another for the same function

Price of complements

a complementary good is a good which is purchased together with another good because it is consumed with that other good

The Economic Problem

all countries have finite resources, yet we have unlimited wants

An Economist's Questions (3)

What to produce? How to produce? For whom to produce?

capital goods

goods purchased by firms to produce other goods

consumer goods

goods purchased by households with the intention of using them

economic growth

increase in the level of output by a nation

reasons for economic growth

New Technology, Improved Efficiency, Education and Training, New Resources

reasons for negative economic growth

Resource Depletion, Weather, Emigration, Wars and conflict

economic assumptions (2)

Consumers aim to maximise benefits, Businesses aim to maximise their profits

why might consumers not maximise benefits

• calculation difficulty

• habits

• influenced

• inadequate information

• they cannot make balanced choices

why might producers not maximise benefits

Sales managers may attempt to sell as much as possible individually,
Alternative business objectives, Enterprises operating as charities, Social Enterprises, don't have access to all of the information

Effective demand

how much would be bought at any given price

factors affecting demand

Demographic Changes, advertising, income, fashion/tastes, substitute price, complement price

opportunity cost

\

consumer economic assumption

1. They will buy the cheapest product out of products of the same quality

2. They will buy the highest quality product out of products at the same price

business economic assumption

1. They will buy the cheapest resources out of resources at the same price

2. They will choose the highest price that the market can stand to maximise revenue and profit

demand

amount of a good which is bought at given prices over periods of time

relationship between price and demand

inverse