Key Concepts
The problem of people having unlimted wants, but limited resources
Scarcity
What are the two sectors in the basic circular flow model?
Businesses and Households/Individuals
The amount of goods or services that are available for people to buy is the definition for what word?
Supply
What are the factors of production?
The resources we need to produce goods and services
What is a pricing strategy?
A plan that business use to determine the price of its products or services.
An individual or business that makes goods or services is known as...
A producer
What do businesses provide for households?
Goods and Services
How much of a good or service people are willing to buy is known as...
List the four factors of production
Land, labour, capital, enterprise
What is cost plus margin?
When the selling price is equal to the total cost to produce the product plus an additional profit or margin that the business wishes to earn.
Someone who purchases goods and services produced with an economy is known as...
A consumer
What do businesses give households in exchange for labour
income
When demand decreases as prices rise, this is known as what law?
Law of Demand
What is an example of a capital resource?
e.g. hammer, machinery, tools, coffee machine etc.
What is an example of economy pricing (where you can buy in bulk)?
Costco!
Mila has $5 and can choose to spend it on either two frozen cokes OR a cheeseburger. She decides to buy the cheesburger. What is the opportunity cost of Mila's decision?
two frozen cokes
What do households give businesses in exchange for wages?
labour
Price goes up when supply goes __(1)___ and demand goes __(2)__
(1) down
(2) up
A businesses ability to put land, labour and capital together to create goods is known as what?
What is psychological pricing?
Charging prices so that they are not a whole number e.g. $9.99 instead of $10.
Define goods and services and provide and example for each.
Goods - an item you purchase that you can physically hold? e.g. phone
Services - something you pay for and is provided to you by a person e.g. hairdresser
What do households provide for businesses, in exchange for goods and services?
Expenditures
What is it called when both producers and consumers are happy with the price and supplied quantity?
Equilibrium
What is an example of an entrepreneur?
What is penetration pricing?
A business may enter the market with a low price to encourage consumers to try the new product. Once the product builds up enough regular customers, the business may raise the price to a level that is more profitable.