Economics

It may be the most boring topic you will ever discuss, but also the most

important.

Economics defined

The allocation of limited resources to satisfy unlimited wants.

Macroeconomics

The study of the total economy GNP Inflation Unemployment Recession

Microeconomics

Concerned with individual decision making Budgeting Lending Accounting (Record Keeping) Advertising Marketing

4 Factors of Production

1) Labor - physical talents 2) Land - Natural Resources 3) Capital - building, equipment,

machinery, money 4) Entrepreneurship - “the brains”

Economic Terms that will make our conversations easier in here

1) Good - “thing” that has value or may be exchanged for a price

2) Opportunity Cost - The value of the alternative surrendered when a choice is made.

3) Supply - the amount of a product that producers are willing to sell in the market at various condition

4) Demand - the amount of a good that people are actually willing and able to buy given the prices and choices available.

Law of Supply

The Law of Supply states that when the price of a product is lowered, with no change in other factors, less of the product will be supplied. Factors that affect Supply?

Law of Demand

The Law of Demand states that when the price of a product is increased with no change in other factors, less product will be purchased. Factors that affect demand?

Size of population affects demand. Tastes and preferences of consumers affects demand. Income and distribution of wealth affects demand. Relative prices of all goods and services affect demand.

Relationship between supply and demand A. Price is found at equilibrium, where the

supply and demand curves intersect. B. If demand curve shifts right, the price

increases. C. If supply curve shifts left, the price

increases.

Relationship between enterprises

Supplementary enterprises are those where one enterprise supplements the income of another. 1. A sports stadium is often used for concerts. 2. A lawn tractor can be used to move snow. 3. Making a corn maze.

Relationship between enterprises

Complementary enterprises are those where one enterprise produces the inputs for another. 1. Soybeans used in rotation to leave nitrogen

for corn. 2. Tree trimming service may sell mulch.

Relationship between enterprises

Competitive enterprises are those where one enterprise interferes with another.

1. Enterprises competing for labor resources. 2. Students who work so much that they do not

have enough time to study. 3. Corn and Soybeans