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Study of choices made by economic actors (i.e. individual people, households, companies, and individual markets), small scale economic issues, or specific economic issues (i.e. unemployment in the auto industry) |
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Looks at the behavior of entire economies such as the unemployment in the U.S. (large scale) |
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All resources are limited, but people's wants are unlimited --> lack of things people want |
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Natural (i.e. oil, wind, coal) Human (i.e. assembly line workers, scientists) Capital (i.e. department stores, dams, computers) Entrepreneur (i.e. people who attempt to start a new business) |
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The type of skilled work force, factories, capital to invest, and a market to sell your goods |
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When one sacrifices one thing for another (if you use a resource to produce/consume one thing, that resource cannot be used to produce/consume something else) |
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Value of the thing you are giving up in a trade off |
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producers increase supply when they can sell a product for more money due to high demand (& vice versa) |
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Factors which affect supply |
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Demand for the product, amount of raw materials available for production |
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wages/salaries, rent, interest on loans, electric bills, raw materials, other goods and services used to manufacture and sell the product |
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Money left over after a business has paid all of its production costs |
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A small change in price greatly affects the amount supplied |
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A small change in price has little impact on the amount supplied |
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A listing that shows quantity supplied at various prices |
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All of the product(s) a company makes in a given period of time |
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The total income that a business receives from selling its products |
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An inverse relationship between a product's price and the quantity demanded |
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When price increases, people will not be able to afford as much --> demand decreases due to price increase |
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When people substitute similar, lower priced items for the desired item (Leland brand if Tae brand is too expensive) |
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Diminishing marginal utility |
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as more of a product is consumed, the satisfaction gained decreases |
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A small change in price greatly affects the quantity demanded |
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A small change in price has only a slight effect on the quantity demanded |
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When a product's demand shifts, different quantities of a product are demanded at each price |
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Consumer tastes and preferences |
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If they like it, they demand it. If they don't, they don't demand it. |
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Goods that are similar to or complement certain goods can be affected by demand shifts |
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Used to replace the purchase of similar goods when prices increase |
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Commonly used with other goods |
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Increases in demand/supply shift |
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Decreases in demand/supply shift |
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When supply and demand in the market are equal |
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The price at the point where supply and demand are equal |
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A lack of products demanded |
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An overabundance of supply caused by overproduction or low demand |
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