commerce Flashcards
What is a Market
Markets are gathering places of buyers and sellers. people purchase and sell items to make a profit
economic problem
scarcity: scarcity is the short supply of goods and products
opportunity cost: opportunity cost is the opportunity lost when you chose to purchase one thing over another
resource allocation: Resource allocation is the process in which a company decides where to allocate scarce resources for the production of goods or services.
difference between needs and wants
needs are necessities in people lives, these include food, shelter, and water, whereas wants are things people don’t need to survive but rather things they want to own, there are unlimited wants
three basic economic questions
- what to produce: In Australia, this is usually determined by consumer demand. producers, in business, to make a profit will produce what consumers want to purchase (consumer sovereignty)
- how to produce: in order to make a profit, producers will look to the most cost-effective methods of production. this may be using technology and automation
- for whom to produce: generally, goods and services are received by those who can afford to pay for them. the government uses taxes to provide some goods and services for everyone such as healthcare and education
consumer sovereignty
consumer sovereignty is where the consumer has some controlling power over what good is produced by the producers
economic resources
- land: Natural resources, the gift of nature
- labor: human skills and effort
- capital: machinery and equipment
- entrepreneurship: the ability to spot opportunities
the law of demand
the law of demand states that as the prices of an item increase the demand will decrease
the law of supply
the law of supply states that as the price of a good or service increases so will the supply
demand and supply curve
demand curve goes from the bottom right hand of the page to the top of the left whereas the supply curve goes from the bottom left to right top
equilibrium prices
the equilibrium porin is where in a marker the supply and demand line meet, making everyone happy
excise tax
an excise tax is a tax placed on some goods or services. this tax is usually placed on the consumer which makes them less likely to purchase it
stakeholders
a stakeholder is a party that has an interest in a company and can be affected or not affected by the business
unintended consequences
unintended consequences are when a business makes a decision and receives an unthought-of consequence because of it
economics
the study of how individuals, businesses, and governments, and other groups make decisions on how to use our limited economic resources and how these decisions affect living standards
capital
man-made products used in the production of goods and services such as machinery, plant, and equipment
