Its time

Topics: Economics, Supply and demand, Unemployment Pages: 64 (24357 words) Published: September 21, 2014

An introduction in to Microeconomic
Key economic concepts
Relative scarcity: is a concept that describes that our needs and wants are unlimited, however our resources are limited 4 types of resources (factors of production)
Land; occurring resources
- Tress
- Minerals
- Wheat
Labour; the mental and physical effort by humans in the production process - Builder
- Teacher
- Doctor
- Chief
Capital; the man-made resources that are used to produce goods and services - Hammer
- Oven
- Machines
Enterprise; the skills that are used to decide how to best combine the land, labour and capital resources - CEO
- Architect (physical land they use, hammers, saws, building) - Recipe Writer (they are the people that decided what sort of resources to combine; oven, flower, cook) Opportunity Cost: the value of the next best alternative forgone when a choice is made Types of Efficiency

Technical (productive) efficiency: when it is not possible to increase output (good or service) without increasing inputs (resources). For example, if a farm is able to use the same amount of land to now increase its production of tomatoes by 20% it has increased its technical efficiency. Dynamic efficiency: how quickly an economy can reallocate resources to achieve allocative efficiency (change the way they use their resources quickly). For example, how well an electronic company can move its resources (such as metal and workers) from the production of computers to the production of digital cameras. Allocative efficiency: a type of efficiency measured by how well resources are being allocated in the economy. The most efficient allocation of resources occurs when living standards and welfare are maximised and it is not possible to further increase living standards by changing the way resources are allocated. For example, when allocative efficiency is reached it means that resources cannot be reallocation in a way that would improve the standard of Australians. Inter-temporal efficiency: how well resources are allocated over different time periods (so that the resources are not used up in one period, and are spread across an appropriate amount of time). For example, ensuring that new trees are planted so that there are trees for future generations. 

Economic factors influencing decision-making
- Income/ budget constraints
- Consumer confidence/ sentiment
- Preferences
- Interest rates
- Advertising
- Government- changing law, banning something’s, taxing something’s (helmets) (increasing tax’s on cigarettes) Businesses
- Profitability
- Demand from households
- Government- taxes, law
- Production costs (suppliers that increase prices, keep or look for another supplier?) - Actions of their competitors
- Wanting to stay in power
- Demographics (changes in the size and make-up of the populations) - Wanting to maximise living standards of citizens
- Other countries (trade, politics, war)
The law of demand
The law of demand states that when the price of a product increases, the quantity demanded decreases. For example when the price of bananas increase, the quantity of bananas demanded decreases

- Movements along the curve are caused by changed to the price of that product

Microeconomics demand factors (cause the demand curve to SHIFT) Disposable income: the amount of income that a household has received in exchange for their labour after income...
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