Economic Principles

Supply and Demand are Equal: A state known as equilibrium, where the amount of goods or services provided matches consumer demand. For example, when supply meets demand, prices typically stabilize.

The Substitution Effect Occurs: When consumers replace a more expensive product with a cheaper alternative (e.g., choosing chicken over beef if beef prices increase). This effect influences demand based on price changes.

Demand is Greater than Supply: When consumer desire for a product exceeds its availability, often leading to higher prices (e.g., high demand for limited-edition items).

Supply is Greater than Demand: When there is more of a product than consumers want, leading to potential price reductions (e.g., excess stock in retail stores after a holiday season).

Buyer’s Market: A market condition where supply exceeds demand, giving buyers an advantage (e.g., in real estate, many homes for sale and few buyers drive prices down).

Buyer’s Psychology: The study of how buyers think, feel, and make purchase decisions, often influenced by emotions, social factors, and marketing strategies (e.g., using discounts to create a sense of urgency).

Consumer Behaviour: The analysis of why and how people make purchasing choices, including preferences, motivations, and cultural influences (e.g., trends in eco-friendly product buying).

Accounting: The process of recording, summarizing, and reporting financial transactions for a business or individual. It helps track finances and make informed decisions.

Process of Accounting: The systematic steps involved in tracking financial activities, such as recording transactions, posting to ledgers, and preparing financial statements.

Financial Accounting: A branch of accounting focused on preparing financial statements that reflect a company’s financial health, for stakeholders like investors and creditors.

Taxation: The process by which a government collects money from individuals and businesses to fund public services and infrastructure (e.g., income tax).

Finances: The management of money, including budgeting, saving, investing, and borrowing. It encompasses both personal and business financial activities.