GDP
GDP stands for ... .
Gross Domestic Product
Who makes the demand ?
Consumers
Who makes supply?
Producers
There are .... types of elasticity.
What are they?
4 types:
1. Price elasticity of demand
2. Income elasticity of demand
3. Cross elasticity of demand
4. Price elasticity of supply
There are .... main factors of production.
4
What is included in GDP
final goods
services
constructions
legal market activities
How is the relationship between the price and demand?
If price increases, quantity demanded decreases.
If price decreases, quantity demanded increases.
How is the relationship between the price and the quantity supplied?
If the price increases, the quantity supplied rises.
If the price decreases, the quantity supplied falls.
Price elasticity of demand measures the relationship between the _________ and __________ .
According to the results of calculations:
Ed > 1
Ed < 1
Ed = 1
price and quantity demanded
Ed > 1 - elastic
Ed < 1 - inelastic
Ed = 1 - unit elastic
Definition of labor
Human effort used in production
What is NOT included in GDP?
used goods
transfer payments
housework
illegal activities
volunteer work
If the price of substitutes decrease, the demand for the current product .... .
Make an example!
decrease
For example, if the price of Fanta decreases, the demand for Pepsi may fall.
How would it affect the quantity supplied, if the government sets a higher tax policy?
This would reduce the quantity supplied.
Income elasticity of demand measures the relationship between the ________ and _________ .
According to the results of calculation:
IEd = positive
IEd = negative
income and quantity demanded.
IEd = positive - normal good
IEd = negative - inferior good
The definition of entreprenuership
The ability to take risks, start and manage a business.
There are three types of calculating GDP:
1. Production Method
2. Income Method
3. Expenditure Method
If the price of complimentary good rises, the demand for the current good ... .
Make an example!
decreases
For example, if the price coffee increases, the demand for donut may fall.
What happens to the supply, if production costs increase?
Quantity supplied decreases.
Cross elasticity of demand measures the relationship between the _________ and _________ .
CEd = positive
CEd = negative
the price of good A and the quantity demanded of good B
CEd = positive - goods are substitutes
CEd = negative - goods are complements
What is capital?
Capital includes man-made goods used to produce other goods and services, such as machines, tools, buildings, and equipment.
The full definition of GDP
Gross Domestic Product (GDP) - is the total market value of all final goods and services produced within a country during a specific period.
What are the 4 factors that influence demand?
Explain them with proper examples!
price
income
substitutes
complemenrtary goods
What are the factors that influence the supply?
Explain them with proper examples!
price
cost of production
technology
number of sellers
tax policy
Price elasticity of supply measures the relationship between the ________ and ________ .
Es > 1
Es < 1
Es = 1
price and supply
Es > 1 - elastic
Es < 1 - inelastic
Es = 1 - unit elastic
What reward does each factor receive?
Land
Labor
Capital
Entrepreneurship
Land receives rent.
Labor receives wages.
Capital receives interest.
Entrepreneurship receives profit.