Economics itself is the production, consumption, and distribution of goods and services (Nondo). There are three types of economic system: market economy, mixed economy, and command/planned economy. Market economies are the best at deciding how much to produce, consume, and distribute. For example, capitalism is an example of a market economy. Under capitalism, prices and wages are determined by the forces of supply and demand. Command and control is where the planning authority makes all decisions regarding produce, consumption, and distribution. A mixed economy consists of market and command.
Microeconomics is the study of decisions that people and businesses make regarding allocation of resources and prices of goods and services (Nondo). …show more content…
Goods can be classified as inferior or normal. Inferior goods are where incomes go up, and demand a decrease which causes an inward shifting (Nondo). An inferior good can be viewed as anything consumers would demand less of if they had a higher level of real income. An example of an inferior good is public transportation because as income goes up, car insurance and gas become less affordable. Normal goods are where income increases and demand a decrease, which causes an outward shifting in the demand curve (Nondo). For example, during income tax season cars become a normal good, so as income increases, the demand for cars will …show more content…
This period is when a firm or individual can change the quantity of one input only, while the other input remains unchanged. For example, labor in the short run can easily be changed, while the amount of capital cannot. The short run is anytime a period is than less or equal to a year. The long run is the quantity in which a period of all inputs can be varied. It is a period of three years, during which all inputs of production become variable. Inputs can include labor, capital, or other resources. Fixed is a cost that does not change with the amount of output produced, so they are already paid in the short run. Although short run has reduced cost, long run does not; due to the fact business can be done at any
Microeconomics is the study of decisions that people and businesses make regarding allocation of resources and prices of goods and services (Nondo). …show more content…
Goods can be classified as inferior or normal. Inferior goods are where incomes go up, and demand a decrease which causes an inward shifting (Nondo). An inferior good can be viewed as anything consumers would demand less of if they had a higher level of real income. An example of an inferior good is public transportation because as income goes up, car insurance and gas become less affordable. Normal goods are where income increases and demand a decrease, which causes an outward shifting in the demand curve (Nondo). For example, during income tax season cars become a normal good, so as income increases, the demand for cars will …show more content…
This period is when a firm or individual can change the quantity of one input only, while the other input remains unchanged. For example, labor in the short run can easily be changed, while the amount of capital cannot. The short run is anytime a period is than less or equal to a year. The long run is the quantity in which a period of all inputs can be varied. It is a period of three years, during which all inputs of production become variable. Inputs can include labor, capital, or other resources. Fixed is a cost that does not change with the amount of output produced, so they are already paid in the short run. Although short run has reduced cost, long run does not; due to the fact business can be done at any