1. Economics Economics is a social science that studies choices that people, businesses, government and entire societies make as they cope with scarcity. There are two types of economics: Macroeconomics Microeconomics
2. Factors of production Economics depend on the following four factors of production: Land Labour Capital Entrepreneurship
3. Demand and Supply If you demand something you: Want it Can afford it Plan to buy it
4. Law of DemandThe law of demand states: Other things remaining the same, the higher the price of a good, the smaller is the quantity demanded; and the lower the price of a good, the greater is the quantity demanded.
5. Factors bring changes in demand Expected future prices Income Expected future income Population Preferences
6. Supply If a firm supplies a good or service, the firm: Has the resources and technology to produce it, Can profit from producing it Plans to produce and sell it.
7. Law of SupplyOther things remaining the same, the higher the priceof a good, the greater is the quantity supplied; andthe lower the price of a good, the smaller is thequantity supplied.
8. Factors that brings change in supply The prices of productive resources The prices of related goods produced Expected future prices The number of suppliers Technology
9. ElasticityPrice elasticity of demand is a unit free measure of the responsiveness of the quantity demanded of a good to a change in its price when all other influences on buyers’ plans remain the same.Calculating Price Elasticity of DemandPrice Elasticity of Demand:Percentage change in quantity demanded Percentage change in price
10. Types of elasticity of demand Perfectly inelastic demand Unit elastic demand Perfectly elastic demand