ECON Vocab 1
What is the study of the production, consumption, and distribution of goods and services?
Economics
In an economy, what is unlimited?
Wants and Needs
What is the law of supply?
As price increases, so does quantity.
What are things people like and desire.
Wants
The value of time, money, goods, and services given up in an economic choice.
Opportunity Cost
In an economy, what is limited?
Resources and Goods
What is the law of demand?
As quantity increases, price decreases (Inverse relationship)
What are things you must have to live.
Needs
The law that states: when price increases, quantity also increases. When price decreases, quantity also decreases
Law of Supply
What is opportunity cost?
Cost of the missed opportunity. The missed value of every decision.
What is the equilibrium point and what is it used for?
The point in which supply and demand cross, this is where price should be set.
You have just opened a construction company. What are examples of the three type of resources you will need.
Human - workers, managers
Capital - construction equipment, vans, tools, machines
Natural - materials used to build, concrete, metal
A resource that values person’s knowledge, skills, attitudes and abilities.
Human Resources
Give one cause of scarcity.
1. Personal Perspective
2. Poor Distribution of Resources
3. Rapid Increase in Demand
What will happen when the equilibrium price increases? What is the economic term used to describe this situation? Draw a quick supply and demand graph to support your answer.
Quantity supplied will go up but quantity demanded will go down. (Surplus)
What does it mean to have inelastic demand? Give an example to support you answer.
Gas - people will continue to buy it no matter the price change.
The degree to which changes in price cause changes in demand or supply
Elasticity of Supply & Demand
Give an example of how scarcity occurs in our society today.
Answers can vary. Food - world hunger. Poverty.
What will happen if the equilibrium price goes down? What is the economic term we use to describe this situation? Draw a quick supply and demand graph to support your answer.
The quantity supplied will go down and the quantity demanded increases. (Shortage)
What are the four economic questions?
1. What goods and services will be produced?
2. How will the goods and services be
produced?
3. Who are the goods and services for?
4. How much will be produced now and how
much later?