Economy
What is shortage?
When the price is too low and the quantity demanded is greater than the quantity supplied
What is surplus
When the price is too high. The quantity supplied is greater than the quantity demanded.
Equilibrium point is:
When the demand is constant as equal as the supply.
Elasticity:
Elasticity is a measure of how sensitive one economic variable is to changes in another variable.
Elasticity of demand
Measures how much quantity demanded changes when the price changes.
Impact of elastic demand:
Elastic demand shows a strong reaction to price changes
What shows inelastic demand?
Inelastic demand shows a small reaction to price changes
What is imperfect competition?
Is a market structure in which companies can influence prices, and face barriers that limit the entry or exit of new firms.
What is an economic barrier?
Economic barriers are factors that prevent new firms from entering a market, giving existing companies an advantage and limiting competition.
Monopoly:
A single company controls the entire market of a product or service, with no close substitutes.
Oligopoly:
In an oligopoly, the market has a small number of companies that dominate the industry.
What is a price taker?
A price taker is a market participant that cannot influence the price of a good or service.
Types of efficiency:
Allocative and productive efficiency
What is allocative efficiency?
Optimal quantity of goods produced.
What is productive efficiency?
Lowest possible cost using available resources and technology.