Economics: Chapter 3 - Notes

Cost

What it takes in terms of dollars or resources to produce a particular product or service. Buying korn your also paying for the seeds

Factor Market

Where the factors of production, natural resources, labor, capital, and entrepreneurship are boughts and sold

Negative Incentive

a penalty that discourages a behavior, parking ticket, library fine

Circular Flow

A model of the movement of goods, services, resources, and money in an economy. Is the movement of output + income from 1 sector of the economy to another, often illustrated as a circular flow diagram

Costs

An amount that must be paid or spent to buy or maintain something. The effort lost or sacrifice necessary to achieve or abtain something. The money spend for the imputes used in producing a good or service.

Per Capita GDP

An important measurement of the standard of living for an economy. The nations GDP (for a year) / by the nations population. An economy that is showing continual improvement in per capita GDP is likely experiencing a rising standard of living for its citizens. Increased productivity is important to a society because it leads to reduced costs of production and higher standards of living for its citizens. People should be able to explain how reducing costs can increase the standard of living of others. The key to productivity and GDP to get people to understand that standard of living is not determined by money but by access to goods and services. Calculated by using a nations GDP for a given year and dividing it by the nations population. A nation with constantly rising per capita GDP is experiencing a rising standard of living, this is because each member of the population on average has a larger portion of of the total goods produced and services produced by that nation economy. Market value of all final goods and services produce in a country in a calendar year divided by the total population.

Costs

Are an amount that must be 1:20

Consumers

Are powerful in a market economy, and the economic choices of consumers in the market place drive the behavior of producers. Businesses must respond to the wishes of consumers to succeed. Consumers cast their dollar vote, deciding what will be produced. It is important for business owners and their employees to understand this. Costumers who receive poor service or inferior products will take their business else where.

Physical Capital

Assets used in production that are made by humans is non human, tools

Product Market

Consumer goods and services, things consumers buy cuz the goods and services provide them with satisfaction, they're exchanged in the product market.

Inventors

Create a new product but don't necessary bring it to market

Starting a new business involves some risk

Entrepreneurs must invest their own time and resources before making product available in the market. Create business imitating to those around them, such as new grocery story or new dry cleaning business. These business create jobs and often provide important products for their communities, other entrepreneurs take on an even greater challenge of innovating or bring a new invention to the market. In addition to accepting the risks entailed in starting a new buisssness these innovative entrepreneurs must have the vision originality and daring to seek of opportunities for a new product or service and introduce it to the public. Innovative entrepreneurs are responsible for much of the growth in our economy. Things like the radio, airplane, and personal computer. These inventions change the way people,live their lives often fostering a more efficient and productive economy.

3 - entrepreneurs as visionaries and risk takers

Entrepreneurs take on the calculated risk of starting new business either by embarking on new ventures, similar to existing one by introducing new innovations. Entrepreneurial innovation is an important source of economic growth. Entrepreneurs create the new business in our economy, they take on the challenge of creating or identify a product, assessing the market for the product, determine the price for th product, creating a strategy for the business, obtaining funding for the new enterprise, hiring and managing employees, and assuming the risk associated with the new venture. Entrepreneurs are often motives by the potential for financial rewards, as well as an interest in working for themselves. If they are successful entrepreneurs receive a profit that remains after they pay salaries for employees, taxes to the government, and all other coast associated with the business.

Entrepreneurs

Entrepreneurs take on the calculated risk of starting new business either by embarking on new ventures, similar to existing one by introducing new innovations. Entrepreneurial innovation is an important source of economic growth. Entrepreneurs create the new business in our economy, they take on the challenge of creating or identify a product, assessing the market for the product, determine the price for th product, creating a strategy for the business, obtaining funding for the new enterprise, hiring and managing employees, and assuming the risk associated with the new venture. Entrepreneurs are often motives by the potential for financial rewards, as well as an interest in working for themselves. If they are successful entrepreneurs receive a profit that remains after they pay salaries for employees, taxes to the government, and all other coast associated with the business.

Falling costs

Falling costs tend to increase profits and or lead to lower prices and goods and services. A change in the cost of production influences how much of a good or service will produced or supplied. When costs of inputs rise profits will fall or the price of a good or service will be increased and sales will decrease. Example. Lumber costs go up. Home builder profits will fall. House price goes up When costs decrease through reduction in the costs of inputs profits can increase or the price of the goods or service and be decreased and sales may increase.

2:00

Foster encominic process and economic growth. Joseph Trumpter

Price vs. Cost

From television advertisements to casual conversation cost and price are used interchangeably. But they are different, a business must considered the costs of producing the product as well as consumer demand for the product before it sets a products price. The difference between cost and price needs to be brought to peoples attention as they have very different implications for decision making.

4 - Cost v Price

From television advertisements to casual conversation cost and price are used interchangeably. But they are different, a business must considered the costs of producing the product as well as consumer demand for the product before it sets a products price. The difference ebqteeen cost and price needs to be brought to peoples attention as they have very different implications for decision making.

Technological Change

Improvements in affirms affirms ability to produce do to improved processes, methods machines, physical capital - assists used in production that ,add by humans but is non human.

Profit

Income received for entrepreneurial skills and risk taking, calculated by subtracting all of a firm's cost of producing a good or service form the revenues received from selling the good or service. Profit is income to business owners. The desire for profit persuades entrepreneurs to establish new business, expanded existing ones, and change the kinds of goods and services produced, the desire for profit motivates owners and managers to introduce cost cutting technologies to compete more vigorously will other business for consumer dollars. Similarly losses or negative profits are a single to move resources elsewhere. In a competitive market economy, profits and losses sper efficiency, growth, change, and economic, profit. People often see profits as benefiting only buisssnes , the important thing about profits and loses is that they direct buisssnes toward producing the goods and services that consumers value more. And away from producing the goods and services that consumers value less. Profits reward firms that produce efficiently and correctly snticipate which goods and services consumers want most. Inefficient buisssnes and firms that do not adapt to changes and consumer preferences and changes in technology are penalized by injuring losses.

Economic Growth

Is a sub stained rise in a nations production of goods and services.

Productivity

Is the amount of output goods and services produced per unit of input, productive reassures used Workers can also increase there productivity by using physical or real capital such as tools and machinery. Increases in this result from advances in techonolgy and improvements of physical and human capital. Investment in human and physical capital can increase productivity and thus raise future standards of living by increaseing economic growth

Revenue

Isnincome generate by sales of goods and services (price * quantity)

Standard of Living

Level of subsistence of a nation, social class, or individual with reference to the adequacy of necessities and comforts of daily life.

Standard of living

Level of subsistence of a nation, social class, or individual with reference to the adequacy of necessities and comforts of daily life.

2 - Consumers Rule

Often gets lost in discussions about buissness, govenrment, unemplyment, and inflation. Cosumers offten seen themselves as viciutms of buissness. There is often littele undertanading of the role of the consumer in the producers descisions. Prducers are well served only when consumers are well served. Producers who dont udnersnd this wont be producers for the long term. Consumers who dont udnertand that underestimate their market power.

Positive Incentive

Prize or award

Human Capital

Refers to the combination of a person's education, knowledge, experience, health, habits, training, and talent. A person who has acquired more human capital be able to produce more at the individual level additions to human capital are closely connected to earning higher wages in income. At the level of the national economy gains in the average level of human capital for the population are a primary source for productivity growth and economic growth. Health, education, experience training, skills and values of people. Invest in human capital through education, training and experience. Through investment in this workers learn how to produce more efficiently, thus increasing productivity.

Rising costs

Rising costs Decrease profits and or lead to higher prices of goods and services.

Price

The amount consumers pay when they buy a good or service the amount a producer receives when they sell a good or service.

Cost of Production

The amount paid for reassures like land labor capital and entrepreneurship that are used to produce goods and services.

Consumer Sovereignty

The concept that consumers rule and buyers ultimately determine which goods and services remain in production.

consumer sovereignty

The concept that consumers rule and buyers ultimately determine which goods and services remain in production.

Gross Domestic Product

The key measurement of economic growth. It is comprised of all the final goods and services produced and purchased by an economy in a single year. An important way to measure whether or not an economy is growing is to measure the economies output, called gross domestic product (GDP). It is the measure of the final goods and services produced in an economy in a single year and that number can be used to determine whether or not a nation's standard of living is improving, done through the statistic of per capita GDP. (Average share of GDP per person in an economy. GDP then is the market value of all final goods and services produced in a country in a calendar year.

Gross Domestic Product (GDP)

The key measurement of economic growth. It is comprised of all the final goods and services produced and purchased by an economy in a single year. An important way to measure whether or not an economy is growing is to measure the economies output, called gross domestic product (GDP). It is the measure of the final goods and services produced in an economy in a single year and that number can be used to determine whether or not a nation's standard of living is improving, done through the statistic of per capita GDP. (Average share of GDP per person in an economy. GDP then is the market value of all final goods and services produced in a country in a calendar year.

Real GDP per Capita

The measure most often used to measure standard of living. Is calculated by dividing a nations real GDP by population. It is what each persons share would be if the total output of a country was divided equally among its' citizens. As productivity of labor improves and economy grows real GDP per capita increases and standard of living rises. Economic growth has been the vehicle for alleviating poverty and raising the standard of living.

Supply

The quantity of a good or service that will be brought to market at every price at a given time. When cost of production rises supply will decrease. When cost of producing decreases supply will increase.

1:20. Consumption

The soul end and purpose of all production