Factors of Production: Entrepreneurship

managers, risk takers, organizers, etc.

producer can produce the most output

requires the least amount of input (low-cost production)

produce goods and services at a lower opportunity cost compared to the competition

Comparative Advantage

countries should trade if they have a relatively lower OC

should specialize in the good "cheaper" to produce

Economic systems: Private sector

part of the economy run by individuals and businesses

part of the economy controlled by gov

gov redistributes income (welfare, social security)

payment for the factors of production

Economic systems: Public sector

part of the economy controlled by gov

part of the economy run by individuals and businesses

gov redistributes income (welfare, social security)

payment for the factors of production

gov redistributes income (welfare, social security)

part of the economy controlled by gov

gov redistributes income (welfare, social security)

payment for the factors of production

an inverse relationship between P&Q

higher price of a good, lower the quantity that will be purchased by consumers.

a direct relationship between P&Q

Downward sloping curve (Demand)

subs effect: P decreases, buy more

income effect: P decreases, can buy more

subs effect: P increases, buy more

income effect: P increases, can buy more

Law of Diminishing Marginal Utility

less additional satisfaction from each additional unit

marginal utility from consuming each additional unit of a commodity declines as its consumption increases.

more additional satisfaction from each additional unit

no additional satisfaction from each additional unit

Shifters of Demand curve

taste and preferences, number of consumers, P of related goods, income, future expectations

taste and preferences, number of consumers, P of related goods, income, technology

taste and preferences, number of consumers, P of related goods, gov actions, future expectations

a direct relationship between P&Q

when P increases, profit seeking firm have an incentive to produce more

an increase in the price of goods or services results in a decline in their supply

Shifters of Supply curve

p/availability of inputs (resources), number of sellers, technology, gov actions, expectations of future profit

p/availability of inputs (resources), number of consumers, technology, gov actions, expectations of future profit

p/availability of inputs (resources), number of sellers, P of related goods, technology, gov actions

Change in P of related goods: subs

subs: P rises in one good cause D for other good to increase

subs: P declines in one good cause D for other good to increase

Change in P of related goods: Comps

P rises in one good cause D for other good to decrease

P declines in one good cause D for other good to decrease

normal: Y rises → D increases inferior: Y rises → D decreases

normal: Y rises → D decreases inferior: Y rises → D increases

normal: Y rises → D increases inferior: Y rises → D increases

Elastic demand: Q is sensitive to a change in P

if P increases, Qd will fall a lot if P decreases, Qd increases a lot

if P increases, Qd increases a lot if P decreases, Qd increases a lot

if P increases, Qd increases a lot if P decreases, Qd will fall a lot

Characteristics of Elastic Goods

elasticity of demand coefficient > 1

percentage change in Q/percentage change in P

Inelastic Demand: Q is insensitive to a change in P

if P increases, Qd will fall a little if P decreases, Qd increases a little

if P increases, Qd will fall a lot if P decreases, Qd increases a lot

if P increases, Qd increases a little if P decreases, Qd will fall a little

Characteristics of Inelastic Goods

% change in Q over % change in P

Cross - price Elasticity of Demand

how sensitive a product is to a change in P of another product

how insensitive a product is to a change in P of another product

how a product changes when the P of another product increases

how a product changes when the P of another product decreases

Income Elasticity of Demand

how sensitive a product is to a change in income

how insensitive a product is to a change in income

how the P of a product changes related to income

TR test (S curve): relatively inelastic

P👆🏼, TR👆🏼 P👇🏼, TR 👇🏼

P👇🏼, TR👇🏼 P👇🏼, TR 👆🏼

P👇🏼, TR👆🏼 P👇🏼, TR 👆🏼

TR test: relatively elastic

P👆🏼, TR👇🏼 P👇🏼, TR👆🏼

P👇🏼, TR👇🏼 P👇🏼, TR👆🏼

P👆🏼, TR👇🏼 P👆🏼, TR👆🏼

P👆🏼, TR👆🏼 P👇🏼, TR👇🏼

the P consumers pay for a product is less than the P they're willing to pay

the P consumers pay for a product is the same as the P they're willing to pay

the P consumers pay for a product is more than the P they're willing to pay

the total amount that a producer benefits from producing and selling a quantity of a good at the market P

the total amount that a producer benefits from producing and selling a quantity of a good at the P setting by other firms

the total amount that a producer losses from producing and selling a quantity of a good at the market P

Price ceiling = always goes below E

maximum legal P a seller can change for a product

the goal is to make affordable by keeping the P from reaching Eq

minimum legal P a seller can change for a product

the goal is to make necessities by keeping the P from reaching Eq

Price floor = always goes above E

keeping P high by keeping the P from falling to Eq

minimum legal P a seller can sell a product

maximum legal P a seller can sell a product

keeping P low by keeping the P from falling to Eq

Tax: Perfectly inelastic

tax burden entirely paid by consumers

tax burden entirely paid by sellers

tự túc là hạnh phúc

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Practice Problem

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Hà Phạm

Used 4+ times

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90 questions

Show all answers

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Economics: social _ analyzing the most efficient way to use _ resources

science/scarce

ideology/limited

duty/unlimited

FILL IN THE BLANK QUESTION

1 min • 1 pt

Scarcity: ___ wants but limited resources

MULTIPLE SELECT QUESTION

45 sec • 1 pt

Opportunity Cost

most desirable alternative given up when making a choice

opportunity cost measures only the value of the next-best alternative

second best option

first best option

MULTIPLE SELECT QUESTION

45 sec • 1 pt

Factors of Production

Labor

Land

Capital

Entrepreneurship

Competition

MULTIPLE SELECT QUESTION

45 sec • 1 pt

Factors of Production: Labor

physical + mental input

workforce

wages

machines

MULTIPLE SELECT QUESTION

45 sec • 1 pt

Factors of Production: Land

extracted resources (materials from environment for human use)

farms, crops, soil, forests for rent

manmade production

MULTIPLE SELECT QUESTION

45 sec • 1 pt

Factors of Production: Capital

fixed + working capital

manmade use of productions (machinery, buildings)

gaining interest

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Economics: social _ analyzing the most efficient way to use _ resources