We hope that this has given you some insight to the market and, in turn, your investment strategies. Let's recap what we've learned in this tutorial:
- Economics is best described as the study of humans behaving in response to having only limited resources to fulfill unlimited wants and needs.
- Scarcity refers to the limited resources in an economy. Macroeconomics is the study of the economy as a whole. Microeconomics analyzes the individual people and companies that make up the greater economy.
- The Production Possibility Frontier (PPF) allows us to determine how an economy can allocate its resources in order to achieve optimal output. Knowing this will lead countries to specialize and trade products amongst each other rather than each producing all the products it needs.
- Demand and supply refer to the relationship price has with the quantity consumers demand and the quantity supplied by producers. As price increases, quantity demanded decreases and quantity supplied increases.
- Elasticity tells us how much quantity demanded or supplied changes when there is a change in price. The more the quantity changes, the more elastic the good or service. Products whose quantity supplied or demanded does not change much with a change in price are considered inelastic.
- Utility is the amount of benefit a consumer receives from a given good or service. Economists use utility to determine how an individual can get the most satisfaction out of his or her available resources.
- Market economies are assumed to have many buyers and sellers, high competition and many substitutes. Monopolies characterize industries in which the supplier determines prices and high barriers prevent any competitors from entering the market. Oligopolies are industries with a few interdependent companies. Perfect competition represents an economy with many businesses competing with one another for consumer interest and profits.
InvestingCross elasticity of demand measures the quantity demanded of one good in response to a change in price of another.
InsightsThe concept of elasticity of demand is part of every purchase you make. Find out how it works.
InsightsWhat is demand elasticity?
InsightsIncome elasticity of demand is a measure of how consumer demand changes when income changes.
InsightsElasticity measures the relationship between a good and its price based on consumer demand, consumer income, and its available supply. Learn the basics about it here.
InsightsFind out all about supply and demand and how it relates to your daily purchases.
InsightsThe supply and demand for an inelastic good or service is not drastically affected when its price changes.
InsightsDemand elasticity is the measure of how demand changes as other factors change. Demand elasticity is often referred to as price elasticity of demand because price is most often the factor used ...