BASIC CONCEPTS
The basic problem that arises because resources are limited but wants are unlimited.
Scarcity
The quantity of a good consumers are willing and able to buy.
Demand?
Involves the buying and selling of goods from individuals or entities that are not directly involved in the production or distribution of those goods.
Secondary Market
A law that limits prices.
Price control
A celebrity promotes a product on social media, making it more popular among consumers. What happens to demand?
Demand increases
These are essential for survival, such as food and water.
Needs
The quantity of a good producers are willing and able to sell.
What is supply?
Involves economic interactions within a specific location.
Local Factor Market
A price set BELOW equilibrium results in what?
Shortage
The price of a product increases significantly.
What happens to quantity demanded?
Quantity demanded decreases
These are things people desire but can live without.
wants
This occurs when demand exceeds supply.
Shortage?
Encompasses all types of labor transactions, including employment across various industries and sectors within a region or country.
Labor Market
A price set ABOVE equilibrium results in what?
Surplus
A company introduces a new technology that makes production cheaper.
What happens to supply?
Supply increases
These are rewards or penalties that influence people’s choices.
What are incentives?
This occurs when supply exceeds demand.
Surplus?
Involves the exchange of goods and services on an international scale.
Global Product Market
A general increase in prices over time.
Inflation
Consumers expect prices to rise in the future and begin buying more now.
What happens to current demand?
Demand increases
The total money earned from selling goods
Revenue
This function of prices helps decide what, how, and for whom to produce.
Allocation of resources?
A system with little government control, also known as a free market
Free Enterprise Market
How resources are shared among people.
Distribution of resources
A decrease in consumer income reduces their ability to purchase goods.
What happens to demand?
Demand decreases