Economics - The study of how society distributes its limited resources given its unlimited needs ...

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Economics - The study of how society distributes its limited resources given its unlimited needs and wants. by Mind Map: Economics - The study of how society distributes its limited resources given its unlimited needs and wants.

1. Elasticity of Demand Graph

2. Supply - A relationship between a products price and quantity supplied. - Law of supply states there is a direct relationship between price and quantity supplied.

2.1. Changes in Supply - Shown by shifts in supply curve. - Caused by changes in supply determinants.

2.1.1. Supply Determinants - Number of producers. - Resource price. - State of technology. - Prices of related products. - Change in nature. - Producer expectations.

3. Demand - A relationship between price and quantity of demand. - Price and quantity demanded are inversely related. - Market demand is the sum of quantities dmenaded by all consumers.

3.1. Changes in Quantity Demand - Shown by movements along the demand curve. - Caused by price changes.

3.1.1. Demand Determinants - Number of buyers. - Income increase/decrease. - Price of complimentary products. - Price of subsitute products. - Consumer preferences. - Consumer expectations.

3.2. Changes in Demand - Shown by shifts on the demand curve. - Caused by changes in demand determinants.

4. Adam Smith - Specialization of labour increases production.

5. Production Possibility Model - Economy makes two products. -Resources and technology are fixed. -Resources are employed to their fullest capacity.

5.1. Production Possibility Curve - Highlights scarcity of resources. -Has a concave shape, reflects the law of increasing opportunity costs.

6. Market Systems - Traditional economy. - Market economy. - Command economy.

7. Basic Economic Questions - What to produce. - How to produce. - Produce for who.

7.1. Economic Goals - Economic efficiency. - Income equity. - Price stability. - Full employment. - Viable balance of payments. - Economic growth. - Environmental sustainability.

7.1.1. Positive Statements - Scientific statements about economic behaviour. - "What is".

7.1.1.1. Economic Model - Simple economic reality. - Inverse relationship.

7.1.2. Negative Statements - Value based. - "What should be".

8. Opportunity Cost - The cost of choosing one thing over another. - The utility of the best forgone alternative.

8.1. Law of Increasing Opportunity Costs - As the quantity of something rises so does its opportunity cost.

9. Types of Resources - Capital, human and entrepreneural.

10. Pricing

10.1. Price Ceiling - Maximum price set below equilibrium.

10.2. Price Floor - Minimum price set above equilibrium.

10.3. Market Equilibrium - In surplus - Excess supply, price is lowered. - In shortage - Excess demand, price is raised.

11. Elasticity of Demand = percent change demand/percent change price

11.1. Inelastic Demand - Percent change in quantity demanded is less than percent price change.

11.1.1. Perfectly Inelastic - Vertical demand curve. - Price changes, demand stays the same.

11.1.2. Perfectly Elastic - Horizontal demand curve. - Price stays same, demand changes.

11.2. Unit Elastic - Percentages are the same.

11.3. Elastic Demand - Percent change in quantity demanded is more than percent price change.

11.4. Price Elasticty Determinants - Portion of consumer incomes. - Access to subsitutes. - Necessities versus luxuries. - Time.

12. Supply Vs. Demand