Supply & Demand
Define "Demand"
Demand is the quantity of a good or service that consumers are willing and able to purchase at various prices.
Define "Supply"
Supply is the quantity of a good or service that producers are willing and able to sell at various prices.
Why do businesses exist?
The purpose of a business is to organize some sort of economic production of goods or services.
What are economic indicators?
Metrics that help assess/determine the economy’s health.
What is inflation and why does it matter?
The rate at which prices for goods and services increase.
Why it matters: Moderate inflation indicates a healthy economy. High inflation may signal an overheating economy, leading to a recession.
List two factors that affect demand
•Price of the product
•Income levels
•Tastes and preferences
•Price of related goods
•Consumer expectations
List two factors that affect supply
•Production costs
•Technology
•Number of sellers
•Expectations of future prices
•Government regulations
Define "Goods"
Physical items you can buy.
Like a home, car, candy bar, water bottle, etc.
Define "Expansion" within the Business Cycle
Expansion: Economic growth, increasing GDP.
What is the unemployment rate?
The percentage of people actively seeking work but unable to find it.
Define "Price Elasticity of Demand"
Price elasticity of demand measures how sensitive the quantity demanded is to a change in price. It is categorized as elastic or inelastic.
Define "Price Elasticity of Supply"
Price elasticity of supply measures how sensitive the quantity supplied is to a change in price. It is categorized as elastic or inelastic.
Define "Services"
Non-physical items you can buy.
Like tax preparation, legal services, oil changes, college, etc.
Define "Peak" within the Business Cycle
Peak: Highest point of growth before a slowdown.
What is GDP and why is it important?
Gross Domestic Product measures the total value of all goods and services produced.
Why it matters: A high GDP means economic expansion, growth in jobs, and spending. Low GDP signals potential economic recession.
Give an example of a good or service that has an "inelastic price demand"
Gas
Define "Competitive Pricing"
Competitive Pricing: Setting prices based on competitors' prices.
List an Economic Impact of business and how it impacts our society.
Job creation: Businesses help create jobs in our society to employ a variety of people
GDP contribution: Defines how many goods/services our society (America) is creating and putting out to the world to use.
Define "Contraction" within the Business Cycle
Contraction: Economy slows down, decreasing GDP.
What are interest rates and why do they matter?
The cost of borrowing money (set by central banks).
Why it matters: Low interest rates encourage borrowing and spending. High interest rates slow down borrowing and can lead to economic contraction.
What is Market Equilibrium?
Market equilibrium occurs when the quantity demanded equals the quantity supplied at a particular price. This is the point where the market is balanced.
What are some ways the Government can influence pricing?
Taxes, subsidies, and price controls.
•Price floor: Minimum wage laws, where the government sets a minimum price for labor.
•Price ceiling: Rent control, where the government limits the maximum price landlords can charge.
•Subsidies: Government payments that reduce production costs, encouraging more supply.
How is technology changing business operations?
Answers may vary
Define "Trough" within the Business Cycle
Trough: Lowest point before recovery.
What is Consumer Confidence and why does it matter?
It measures how optimistic consumers feel about the economy and their finances.
Why it matters: High consumer confidence means more spending, which boosts the economy. Low confidence leads to reduced spending, slowing economic growth.