Economics part 1

define economics
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Terms in this set (24)
how do you make money with stocksbuy the stock and investwhat does a bond representA loan made by an investor to a borrowerHow do you make moneyhold bond until their maturity date and collect interest payments on them. sell them at a price that's higher then you pay initiallydescribe at least three steps for a company to "go public"select an investment bank due diligence and regulatory filings pricingdescribe the relationship between risk and returnpotential return rises with an increase in riskdescribe the law of demandinverse relationship between price and quantitydefine elasticity of demandflexibility to change priceavailability of substitutesthe more close substitutes there are in the market, the more elasticity is demand because consumers find it easy to switchnecessities and luxuriesnecessities tend to have an inelastic demand where as luxuries tend to have a more elasticity demand.relative importanceHow much of your budget you spend on the goodtimethe longer the consumers have to respond to a price change. they have more time to search for cheaper substitutes and switch their spending.what is an inferior good, what happens to the demand for inferior goods as income risesgoods that are cheap, people will buy less inferior good as income risesdescribe the law of supplydirect relationship between price and quantitydefine equilibrium how does a free market achieve equilibriumstate of balance or stable situation, market supply equal market demand