| A | B |
|---|
| want | things people desire for reasons beyond survival and basic comfort |
| financial resources | money or other items of value that people can use to acquire goods and services |
| discretionary income | money available to be spent after needs are met |
| income | inflow of money you receive from working, investments, etc. |
| assets | money and items of value that you own (their value is th eprice you get if you sold them) |
| expenses | items for which you must spend money |
| net income | more income than expenses |
| net loss | more expenses than income |
| liability | any debt that you must repay |
| net worth | difference between your assets and debts |
| study of scarcity | there are unlimited wants, but limited resource |
| tradeoffs | forces individuals to make chocies because of scarcity |
| opportunity cost | the value of the next best alternative given up to make a choice |
| competitions amont consumers | competition for goods and services leads to higher prices for those wililng to pay for them |
| markets | exist whenever buyers and sellers exchange goods |
| Where do exchanges occur? | face to face interactions like in a store; internet like amazon.com; by phone; mail orders like a catalog |
| demand | the expresion of willingness and ability of a potentail buyer to acqurie certain quantities of an item for various possible prices the buyer can reasonably offer |
| competition among producers | important characteristic of a market economic system; *may lead to better quality goods and lower prices |
| demand curve | represented by a down sloping curve |
| supply | the willingness and ability of sellers or suppliers to make available different possible quantities of a good at all relevant prices |
| supply curve | upsloping (looks different than the demand curve) |
| market price | aka equilibrium price....reached when demand and supply curves intersect |
| supply shortage | exists when the price of a good or service is below the equilibrium price |
| What happens when there is a shortage? | prices go up, quantity supplied increases, quanty demanded will decrease then and shortage will be eliminated |
| supply surplus | exists when the prices of a good or service is above the equilibrium price |
| what happens when there is a surplus? | prices go down, quantity will decrease then, quantity demanded will increase then, and surplus will be eliminated |
| demand shifts | demand for a good or service changes/shifts when there is a change in.....consumers' preferences or income/prices of related goods or services/number of consumers in the market |
| supply shifts | supply of a good or service changes/shifts when there are changes in: prices of productive resources used to make the good or service/number of sellers in a market/opportunities for profit available to producers of other goods or services/technology used ot make the good or service |
