economics test year seven #1

Consumer

a person who buys and uses goods or services for personal or use rather than business.

Producer

a person who creates goods or provides services

The economic problem

having unlimited human wants and needs but limited resources

Four economic questions

1. What to produce?- Which goods and services should the economy make with its limited resources?

2. How much to produce?- how much of these goods and services should be made?

3. How to produce?- What resources, technology, and labor should be used to create the goods and services?

4. For whom to produce?- whom should they make the product/ service for and target?

Two sector circular flow model

a basic economic model that shows how money, goods and services move between two main groups in the economy of households and firms.

• Two sector circular flow model diagram

Price

the amount of money a buyer gives to a seller in exchange for a product or service.

the 6 pricing strategies

1-Cost plus pricing

2-Competitive pricing

3-Premium pricing

4-Loss leader pricing

5-Market entry pricing

6-Dynamic pricing

Cost plus pricing

A simple way a buisinesss decides how to change pricing for products by figuring out how much it costs to make, and then adding a fixed amount on top of that cost to act as profit.

Competitive pricing

a pricing strategy where a business sets prices based on what other businesses are charging for similar products.

Loss leader pricing

where a business sells a product for a very low price or even at a loss to attract more customers.

Market entry pricing

a pricing strategy used wen a buisiness introduces a new product or enters a new market

Dynamic pricing

where the price of a good or service changes depending on demand, time, season and interest.

premium pricing

where a business sets a high price for a product to make it appear high quality.

Consumer demand

the amount of a good or service a consumer will purchase purchase at a certain cost.

Goods

physical items that are bought, sold and owned.

Services

an activity/ labour performed by a person or business to help satisfy a consumer.

Producers

A person or business that makes goods or provides services

Consumers

a person who buys and uses goods and services for personal use rather that for business.

Demand

the amount a consumer is willing to buy at a certain price.

supply

the amount of a product a company. is willing to make and sell for a certain price.

Choice

picking one thing out of a set of different options

opportunity cost

the value of the next-best alternative you give up when you make a choice