Factors of Production
What are the four main factors of production?
Land, Labor, Capital, Entrepreneur
What can cause a rightward shift in the supply curve?
Decrease in production costs, improved technology, or an increase in the number of suppliers.
What factors can increase demand for a product?
ncreased consumer income, changes in tastes or preferences, and the price of substitutes.
State the law of supply.
As the price of a good increases, the quantity supplied also increases.
What is market equilibrium?
The point of intersection where the supply curve meets the demand curve.
How do entrepreneurs contribute to the economy?
Entrepreneurs combines the factors of production to create goods and services.
What is the effect of an increase in production costs on supply?
It typically leads to a leftward shift in the supply curve, reducing supply.
How does consumer income affect demand?
Higher income generally increases demand for normal goods.
State the law of demand.
As the price of a good decreases, the quantity demanded increases.
What is equilibrium price?
The price point at which the quantity demanded meets quantity supplied
Give an example of labor as a factor of production.
A factory worker assembling products.
What is a leftward shift in supply, and what can cause it?
A decrease in supply, often caused by higher production costs or natural disasters
Describe how consumer preferences can shift demand.
If a product becomes more popular, demand will increase, shifting the curve to the right.
What is the relationship between price and demand?
It is an inverse relationship; as one goes up the other goes down.
Assuming demand doesn't change, if there is a shift in supply to the right how do you get back to equilibrium?
The market price will decrease.
Explain the role of capital in production.
Capital includes tools, machinery, and buildings used to produce goods and services.
What role does technology play in shifting the supply curve?
echnology can improve efficiency and reduce costs, causing a rightward shift in supply.
What is the effect of substitute goods on demand?
If the price of a substitute good decreases, demand for the original product may decrease.
What happens when there is a surplus in the market?
Prices tend to fall as suppliers reduce their prices to clear excess stock.
Assuming demand doesn't change, if there is a shift in supply to the left how do you get back to equilibrium?
The market price will increase.
Discuss the importance of natural resources as a factor of production.
Natural resources provide raw materials needed for production.
How does the number of suppliers affect the supply curve?
More suppliers generally increase supply, shifting the curve to the right.
How do expectations of future prices influence demand?
If consumers expect prices to rise, they may buy more now, increasing current demand.
What happens when there is a shortage in the market?
Prices tend to rise as consumers compete for the limited supply.
Assuming supply doesn't change, if there is a shift in demand to the right how do you get back to equilibrium?