About This Chapter
Basics of Economic Theory
Complete the lessons to review the real-world applications of important economic terms and concepts. In this chapter, you study a multitude of factors that can affect the theory of economics, such as capitalism, the free market, price elasticity, and more. You will also learn to identify the roles of consumers and producers in a resource market. After you go through the entire chapter, you should be prepared to do the following:
- Define and give examples of a Free Enterprise System
- Summarize the types of competition with the free market
- Discuss how to use market forces to manipulate supply and demand
- Describe the concepts of scarcity and utility of microeconomic resources
- List budget constraints and consumer choice
- Recall real-word examples and define opportunity cost
- Paraphrase economic systems: traditional, market, command, and mixed
Whether you're using this chapter to get reacquainted with these topics or fill in knowledge gaps, you can quickly achieve your goal. Feel free to review one, several, or all the lessons, and check your understanding of their contents by taking the related quizzes. All the resources in this chapter are available 24/7, enabling you to study whenever your schedule permits.
1. Roles of Consumers & Producers in a Resource Market
When you go to the store, you are a consumer. However, did you know that chances are you've been a producer as well? This lesson explains how roles are reversed in resource markets.
2. What is the Free Enterprise System? - Definition & Examples
Find out what a free enterprise system is and how you benefit as a consumer and business owner in this type of environment. Learn about some common examples of free enterprises.
3. Competition Within Free Markets: Types & Summary
We live in a free market economy, but that doesn't mean there is always free competition. In this lesson, you'll learn about perfectly competitive markets, monopolies, monopolistic markets and oligopolies.
4. Capitalism and the Free Market: Definition & Limitations
Capitalism is an economic system that has played a dominant part in building the world in which we currently live. In this lesson, you'll learn about some key concepts of capitalism, as well as its limitations.
5. Using Market Forces to Manipulate Supply and Demand
While the forces of supply and demand are powerful, they are not immobile. This lesson explains how various market forces can cause the supply and demand curves to shift.
6. Price Elasticity: Understanding Supply and Demand
Marketing managers need to understand the basics of supply and demand in order to develop the precise price for their product. Inelastic and elastic demand explains how sensitive consumers are to price and how much flexibility it allows the marketing team.
7. Microeconomic Resources: Scarcity & Utility
For economics to work, we must assume that resources are scarce and that people will work to secure the greatest utility possible. This lesson explains both scarcity and utility and what they mean for people everywhere.
8. Utility Maximization: Budget Constraints & Consumer Choice
Do you spend your money rationally, or just throw it up in the air? This lesson explains the processes that consumers go through to spend their money and why for some people throwing money in the air with abandon works best.
9. Opportunity Cost: Definition & Real World Examples
Learn the most important concept of economics through the use of real-world scenarios that highlight both the benefits and the costs of decisions. Opportunity cost is a simple yet powerful principle that reveals how to make the best economic decisions possible, and it explains why people make the choices they do.
10. Economic Systems: Traditional, Market, Command & Mixed
The following lesson describes the four types of economic systems that are responsible for all of the buying, selling, and production of goods. A short quiz will follow the lesson to check your understanding of the material.
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