Please enable JavaScript.

Coggle requires JavaScript to display documents.

ECONOMICS - Coggle Diagram

- - - - Scarcity: lack of resources
        Choice: Companies need to decide what to produce, how to produce it and for whom
        Opportunity cost: The option you didnt choose
  - - - positive and normative statements
  - - - Is an economic system in which the government and private businesses help in the economic decisions of the country. Most of the recources are individual owned, but a few are publicly controlled.
    - - A planned economy works by the government that controls all major economic decisions, they decide:
        -what to produce
        -for whom to produce
        -how to produce
        They aim for a long-term national growth.
        
        How it works:
        • Government organizations maje all economic decisions.
        • Prices ad wages are set by the government.
        • Basic goods are sold at low prices.
        • Privately-owned businesses are the minimum, only small shops.
    - - What is a market economy?
        
        A market economy is when the most influential businesses of a country are in charge of allocating resources, based on the demand and supply method.
        These type of economy can fail because of the intervention of the government, since firms don't focalize on allocating resources for a public usage.
        
        How does the price mechanism works:
        1• Excess supply: When there are too many of goods compared to how many people buy them.
        2• Price Falls: to sell the extra stock, the price lowers.
        3• Firms supply less: Lower prices signify less profit, certain firms stop producing.
        4• Price increases again: Because supply decreases goods are scarce.
        5• More firms supply again: the high prices attarcs firms back to the market
        6• Supply increases: mote goods are made, starting the cycle again.
- - - - Elastic: small change in price, great change in demand
      - Inelastic: great change in price , small change in demand
  - - - Market demand curve
        
        Shift to the right = Increase
        Shift to the left = Decrease
      - Market supply curve
  - - - The PPC shows the maximum output of 2 goods, using all avaiable resources.
        It shows that when you produce moro of one good you produce less of the other, the curve shows full and efficient use of current resources and technology, it predicts what will be possible to produce.