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Questions and Answers
According to the Law of Supply, what happens to quantity supplied when price decreases?
According to the Law of Supply, what happens to quantity supplied when price decreases?
What are the three key factors affecting supply mentioned in the text?
What are the three key factors affecting supply mentioned in the text?
In a market equilibrium situation, what condition exists?
In a market equilibrium situation, what condition exists?
What is a characteristic of a Price Floor as described in the text?
What is a characteristic of a Price Floor as described in the text?
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What does the Law of Diminishing Returns suggest will happen when increasing the factors of production?
What does the Law of Diminishing Returns suggest will happen when increasing the factors of production?
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Which of the following is NOT considered a factor of production?
Which of the following is NOT considered a factor of production?
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What is the focus of economics according to the text?
What is the focus of economics according to the text?
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What does the term 'allocation' refer to in economics?
What does the term 'allocation' refer to in economics?
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What does 'scarcity' mean in the context of economics?
What does 'scarcity' mean in the context of economics?
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How is modern agriculture defined according to the text?
How is modern agriculture defined according to the text?
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What does agricultural economics primarily focus on?
What does agricultural economics primarily focus on?
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How is 'product' defined in the context of economics?
How is 'product' defined in the context of economics?
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What is the main purpose of accounting for any business enterprise?
What is the main purpose of accounting for any business enterprise?
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What principle is followed in the Average Cost Method?
What principle is followed in the Average Cost Method?
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In the Engineering Economic Analysis Procedure, what step involves the development of net cash flows for each feasible alternative?
In the Engineering Economic Analysis Procedure, what step involves the development of net cash flows for each feasible alternative?
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Why is it important for an engineering economist to understand business ratios?
Why is it important for an engineering economist to understand business ratios?
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What is the process of recording all the transactions of a business enterprise that impact on the investment?
What is the process of recording all the transactions of a business enterprise that impact on the investment?
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What do Efficiency ratios measure about a company?
What do Efficiency ratios measure about a company?
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Which activity is part of both the Engineering Economic Analysis Procedure and the Engineering Design Process?
Which activity is part of both the Engineering Economic Analysis Procedure and the Engineering Design Process?
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Which type of ratio assesses the company's ability to meet short-term and long-term financial obligations?
Which type of ratio assesses the company's ability to meet short-term and long-term financial obligations?
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What step involves the determination of criteria for selection of the preferred alternative in the Engineering Economic Analysis Procedure?
What step involves the determination of criteria for selection of the preferred alternative in the Engineering Economic Analysis Procedure?
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How is the Current Ratio primarily used in analyzing a company?
How is the Current Ratio primarily used in analyzing a company?
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Which process involves the systematic recording of all business transactions in financial terms?
Which process involves the systematic recording of all business transactions in financial terms?
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In which method are materials priced at the latest acquisition cost?
In which method are materials priced at the latest acquisition cost?
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What is the distinguishing characteristic of a consumer good?
What is the distinguishing characteristic of a consumer good?
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Which category do producer goods fall into?
Which category do producer goods fall into?
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What is the main characteristic of a service as described in the text?
What is the main characteristic of a service as described in the text?
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In economics, how is 'price' defined?
In economics, how is 'price' defined?
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According to the Law of Demand, what happens when the price of a commodity decreases?
According to the Law of Demand, what happens when the price of a commodity decreases?
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What type of demand occurs when a decrease in selling price leads to a greater than proportionate increase in sales volume?
What type of demand occurs when a decrease in selling price leads to a greater than proportionate increase in sales volume?
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Study Notes
Principles of Economics
- Economics is the proper allocation and utilization of resources, especially scarce resources, to maximize their benefits for the satisfaction of people.
- Allocation refers to the distribution of resources or products to some use.
- Scarcity refers to the insufficiency of inputs to make enough goods to satisfy the wants of all individuals and groups.
Modern Agriculture
- Modern Agriculture includes farming and farm-supply industries, as well as product-processing and distribution industries.
- Agricultural Economics is an applied phase of economics that focuses on all aspects of problems related to agriculture.
Products and Goods
- A product is anything offered for sale to satisfy a want or a need.
- A good is a tangible product that is socially desirable and gives satisfaction.
- Consumer goods are consumed or directly used by people, while producer goods are used to produce goods and services.
Price and Demand
- Price is the value of a product or service expressed in monetary units.
- Demand refers to the quantity of a commodity that is bought at a certain price at a given place and time.
- Law of Demand: As the price increases, the quantity demanded decreases, and as the price decreases, the quantity demanded increases.
Elastic Demand and Supply
- Elastic demand occurs when a decrease in selling price causes a greater than proportionate increase in the volume of sales.
- Law of Supply: As the price increases, the quantity supplied also increases, and as the price decreases, the quantity supplied also decreases.
Supply Price Factors
- Factors affecting supply include technology, cost of production, and price expectation.
Law of Supply and Demand
- The law states that when free competition exists, the price of a product will be that value where supply is equal to demand.
- Market Equilibrium occurs when the exchange takes place, and consumers and sellers are satisfied.
Price Floor and Ceiling
- Price Floor is the minimum price that a supplier can sell their product to consumers, set by the government.
- Price Ceiling is the maximum price that a manufacturer can sell their product to consumers, set by the government.
Law of Diminishing Returns
- The law states that when one of the factors of production is fixed in quantity, increasing the other factors of production will result in a less than proportionate increase in output.
Production and Factors of Production
- Production is the transformation of resources into goods and services.
- Factors of Production (Economic Resources) include:
- Land: provides the space for production.
Engineering Economy in Peacebuilding
- Engineering Economic Analysis Procedure involves:
- Identification of the problem
- Identification of the feasible alternatives
- Development of Net Cash Flows for each feasible alternative
- Determination of criteria for selection of the preferred alternative
- Analysis and comparison of all feasible alternatives
- Selection of the preferred alternative
- Post-evaluation
Concepts in Accounting
- The main purpose of accounting is to provide necessary financial information to the management for the proper and efficient operation of the enterprise.
- Accounting involves recording all business transactions that impact on the investment.
- Bookkeeping is the systematic recording of all business transactions in financial terms.
- Methods of costing include:
- First-In, First-Out (FIFO) method: materials last obtained are the first to be issued and priced at the latest acquisition cost.
- Average Cost Method: materials are priced at the average of all materials on stock at that time.
Business Ratios
- Business ratios are used to evaluate the financial health of a company over time and in relation to industry norms.
- Ratios are classified according to their role in measuring the corporation, including:
- Solvency ratios: assess ability to meet short-term and long-term financial obligations.
- Efficiency ratios: measure management's ability to use and control assets.
- Profitability ratios: evaluate the ability to earn a return for the owners of the corporation.
- Current Ratio: analyzes the company's working capital condition.
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Description
Test your knowledge on the economic principles of supply and demand. Learn about the Law of Supply, which states that quantity supplied increases with price under the assumption of ceteris paribus. Explore the factors affecting supply price and how free competition determines the equilibrium price.
