What is Economics?
Economics is the study of how society chooses to use its scarce resources for the production of goods and services to satisfy unlimited wants.
Example of Traditional Economic system
Villages in Africa and South America
the Inuit tribes in Canada
the caste system in parts of rural India
the Aborigines in Australia
Most common form of business organization in the US
sole proprietorship
what is demand schedule
table showing quantities demanded at different possible prices
what is supply
the amount of goods available
What are the principles
They are your values and like what you stand for
One of the reasons that a country needs an economic system is because it
Has a limited supply of resources
Six advantages of a sole proprietorship
1.) easy to start
2.) quick and easy decisions
3.) the profits are all yours
4.) the business itself is exempt from income taxes
5.) psychological satisfaction
6.) easy to end
what is demand curve
a graph of the relationship between the price of a good and the quantity demanded
what is quantity supplied
describes how much of a good or service a producer is willing and able to sell at a specific price
What to produce?
the mix and quantity of goods and services that it will produce.
The most common medium of exchange in modern economic systems is
money
6 disadvantages of a sole proprietorship
1.) unlimited liability
2.) difficulty raising financial capital
3.) limited in size and efficiency
4.) limited business experience
5.) difficult attracting qualified buyers
6.) limited life
what is Law of Demand
the claim that, other things equal, the quantity demanded of a good falls when the price of the good rises and vice versa
what is the law of supply
producers offer more of a good as its price increases and less as its price falls
How will the products be produced?
Will we hand make everything or use machines (Capital)
what is Economic System
The way a society uses its scarce resources to satisfy its people's unlimited wants.
owner is personally and financially responsible for all losses
umlimited liability
what is change in demand
a change in the quantity demanded of a good or service at every price; a shift of the demand curve to the left or right.
What does elasticity of supply measure?
how firms will respond to changes in the price of a good or service
For whom to produce?
An economy must decide who is going to receive these goods, For what class are they going to be produced for?
What are the three basic questions all economies must answer?
What to produce?
How to produce it?
Who will it be available to?
busniess jointly owned by two or more persons
partnership
what is demand elasticity
the extent to which a change in price causes a change in the quantity demanded
what is a supply curve
a graph of the quantity supplied of a good at various prices