Definitions
What is scarcity?
Unlimited wants with limited supplies.
What is demand?
A peremptory request.
What is economics?
The study of scarcity and how people use resources.
What market did Adam Smith support?
Free Market
What is the Law of Supply?
The amount of goods available.
What is opportunity cost?
What is given up as a result of the decision.
What is a trade off?
The action of choosing something.
What are the three factors of production?
Land, labor, capital.
What are some concepts in a free market?
Voluntary exchange, individual choice of how something is made and sold, self-regulation, self-interest, competition
What is the Law of Demand?
Desires to own something and the ability to afford it
What is supply?
To make something (needed or wanted) available to someone.
What is a price control?
Minimum or maximum prices set for specific goods.
What is land?
Trees for papers, etc.
What is the Division of Labor for Adam Smith?
Human Nature and Efficiency
Changes in non price factors, technology, input price, number of sellers, and producer expectations are all what?
Determinantes of Supply
What is a shortage?
State in which something cannot be obtained in sufficient amounts.
What is a surplus?
An excess of production.
Putting people to work.
What is wages in Adam Smith?
The concept of private property and motivation.
Income, prices of related goods, number of buyers, consumer expectations are all determinantes of what?
Demand
What is a price floor?
The limit set by the government as to how low a product should go.
What is a price ceiling?
What the government put a legal limit on how high a price could be.
What is capital?
Physical (creating things) and human capital (the knowledge of creating things)
What is the Political Economic System for Adam Smith?
That countries would benefit by individuals going capital and individuals could support domestic interest.
What is the price where the quantity of goods supplied is the same as the quantity of the goods demanded?
Equilibrium Price