ECONOMICSSection 2

Supply

Supply

– the quantity of goods that are sold at a specific price.

The quantity of goods that are produced/exist

Supply Curve

Supply Examples?

Law of Supply

As the price of any product goes up, more people are willing to produce that product.

Demand

Demand

the willingness of consumers to buy a specific good at a specific price.

how much of an item people want

Demand Curve

Demand Examples?

Law of Demand

As the price of any product goes up, less people are willing to buy that product.

Supply and Demand/Equilibrium Price

Equilibrium Price

– quantity demanded equals quantity supplied. The amount of goods put out for sale is equal to the amount of goods that people buy. The point where the supply curve and the demand curve meet. There is no shortage or surplus.

Shortage

Shortage

the amount of a product that people want to buy that is unavailable. When there is not enough of a certain good. Price Goes Up.

Shortage Examples?

Surplus

Surplus

– the amount of a product that is unsold. When there is too much of a certain good.

Price Goes Down.

Surplus Examples?

Value

Value

what something is worth in exchange for something else.

Value Continued

This is the amount of consumer satisfaction directly or indirectly obtained from a good. service, or resource. The more a good satisfies a person's want or need, then the more valuable it is to that person.

Value Continued

Furthermore, different people are likely to place different values on a good. Resources are valuable to the degree that they are used to produce stuff that consumers want. The bottom line is that value, like beauty, is truly in the eye of the beholder.

Value Examples?

Price

Price

the amount of money it takes to purchase something

Price Examples?

Competition

Competition

the actions of two or more rivals in pursuit of the same objective. In the context of markets, the specific objective is either selling goods to buyers or alternatively buying goods from sellers.

Competition

Competition tends to come in two varieties -- competition among the few, which is market with a small number of sellers (or buyers), such that each seller (or buyer) has some degree of market control, and competition among the many, which is a market with so many buyers and sellers that none is able to influence the market price

Competition

Competition benefits the consumer.

Benefits of Competition: Lower Prices Higher Quality of Goods Bigger selection of goods

Competition Examples?

Development

The process of improving living conditions of people through knowledge and technology

Development Examples?

More Developed Countries (MDCs)

Countries with high levels of development

MDC Examples?

Less Developed Countries

Countries in an earlier stage of development

LDC Examples?

Substitute Goods

Substitute Goods

One of two goods that could replace each other. If the price of a good goes up, the demand of a substitute for that good would go up.

Substitute Goods Examples?

Complementary Goods

Complimentary Goods

goods that ‘go together’. An increase in the price of one good leads to a decrease in demand for the other good.

Complimentary Goods Examples?