Save
Busy. Please wait.
Log in with Clever
or
show password
Forgot Password?
Don't have an account?  Sign up 
Sign up using Clever
or
Username is available taken
show password


Make sure to remember your password. If you forget it there is no way for StudyStack to send you a reset link. You would need to create a new account. Your email address is only used to allow you to reset your password. See our Privacy Policy and Terms of Service.

Already a StudyStack user? Log In

Reset Password
Enter the associated with your account, and we'll email you a link to reset your password.
focusNode
Didn't know it?
click below
 
Knew it?
click below
Don't Know
Remaining cards (0)
Know
0:00
edit
Embed Code - If you would like this activity on your web page, copy the script below and paste it into your web page.

  Normal Size     Small Size show me how

Economics 03

Economics lesson 5 to 6

TermDefinitionExtra Definition
How the market system can fail Firms will only produce goods and services if they are profitable, supply products to consumers who are able to pay for them. Resources will only be employed if it is profitable to do so. Harmful goods may be produced if it is profitable to do so. Some producers and consumers may ignore the harmful effects of their activities on others and the environment. Some firms may restrict competition, mislead cogsumers and charge them very high prices.
In a mixed economy a government can intervene in different markets in an attempt to correct the worst market failures It can provide useful and essential goods and services. It can employ people in public sector organizations and provide financial support to private sector firms to boost output and employment. It can provide goods and services for people in the greatest need. It can outlaw the production of harmful goods and dangerous activities. It can outlaw business practices that restrict competition or mislead consumers.
A mixed economy therefore combines the advantages of a market economic system with Government ownership and control of some scarce resources. Government interventions to regulate the actions of private sector firms and consumers in some markets.
By correcting failures in some markets, a government may distort the allocation of resources and cause problems in others High taxes on people and firms can distort market price signals and reduce work incentives. Land regulations can increase production costs and thereforereduce the profitability and supply of some goods and services. Public sector organizations may be inefficient and produce poor-quality goods and services because they do not have to make a profit. Some government spending may be for political or even personal gain.
Demand Willingness and ability to purchase a good at a certain price.
Quantity demanded The quantity of a product that consumers want to buy.
Individual demand The demand of just one consumer.
Market demand The total demand for a product from all of its consumers.
The Law of Demand states As the price of a product falls, the quantity demanded will usually increase.
Effective Demand The word“effective' means that people must actually have the money to make the purchases. e.g. we could all claim to demand a Porsche at $80,000. But, how many of us actually have that amount of money?
A contraction or an extension of demand Movements along the demand curve are caused by a change in price of that good.
Contraction of demand When price increases and demand decreases.
Normal Goods For most goods, as income rises, demand will rise as consumers can now afford to buy more of everything. This will result in a shift to the right of the demand curve. For some products this could be a very small shift.
Inferior Goods Inferior goods are those that consumers will buy less of if their incomes increase. This is because they will buy higher priced alternatives instead. An increase in incomes will cause a shift to the left of the demand curve.
Luxury Goods They are some products that consumers will demand lots more of if their incomes increase.
Substitutes Products that compete for demand as they can be used in place of each other. These products can be competitor products or other products that fulfill the same needs.
Complements Complements are products that are joint in demand as they are related products.
Ceteris Paribus All other variables are held constant.
Consumer Incomes A change in consumers incomes will cause a shift in the demand curve. This shift could be small or large. A change in income will affect normal and inferior goods differently.
Influences on Demand Price of other products (Substitutes and Complements), Tastes and Fashions, Advertising and promotion, Seasonal factors, Government Interventions, Weather, Consumers incomes, Changes in the population.
Market failure When free markets fail to produce goods and services that are worthwhile or when the decisions of producers or consumers result in wasteful or harmful activities.
Popular Economics sets

 

 



Voices

Use these flashcards to help memorize information. Look at the large card and try to recall what is on the other side. Then click the card to flip it. If you knew the answer, click the green Know box. Otherwise, click the red Don't know box.

When you've placed seven or more cards in the Don't know box, click "retry" to try those cards again.

If you've accidentally put the card in the wrong box, just click on the card to take it out of the box.

You can also use your keyboard to move the cards as follows:

If you are logged in to your account, this website will remember which cards you know and don't know so that they are in the same box the next time you log in.

When you need a break, try one of the other activities listed below the flashcards like Matching, Snowman, or Hungry Bug. Although it may feel like you're playing a game, your brain is still making more connections with the information to help you out.

To see how well you know the information, try the Quiz or Test activity.

Pass complete!
"Know" box contains:
Time elapsed:
Retries:
restart all cards