Economics part 1

define economics
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Terms in this set (24)
define economics
the study of how society manages its scarce resources
explain scarcity and the relationship of wants, needs and resources
basic economic problems limitless wants, limited needs not a lot of resources
define opportunity costs v. trade-offs
trade offs is often expressed as an opportunity cost , which is the most preferred possible alternative.
why do economists study productions possibilities graph
demonstrates the point that any Nations economy reaches. It's greatest level of efficiency when it produces only what it is best qualified to produce and trades with other nations for the rest of what it needs
frontier
a curve that illustrates the variations on the amount that can be produced of two products if both depend upon the same finite resources
underutilization
not utilizing to the fullest capacity
growth
increase in the market value of the goods for their manufacture and services produced by an economy over time.
Identify the factors of production. how do they relate to a role in an economys productivity
land, labour, Enterprise and capital. The resources used in creation and producing a good or service and are the building blocks of an economy
define entrepreneurship, how does it relate to production
setting up a business or businesses entrepreneur is a person who combines the factor of production to earn profit.
What does stocks represent
An ownership share in a company
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