ECON101: Fundamental Economics Concepts
Covering Markets, Production, Costs, Revenues,
Labour, Demand, Supply, Elasticity, and Firms
Opportunity cost - A cost of choosing one thing over the next best alternative.✅✅✅
The economic problem - The idea that resources are scare and wants are unlimited✅✅✅
Economy - Where people produce goods and services.✅✅✅
Market - Where a group of people willing to exchange goods and services meet.✅✅✅
Perfect market - Neither Consumer/producer solely influence the price charged for goods and
services✅✅✅
Imperfect market - a powerful consumer or producer can influence prices✅✅✅
The four factors of production - Land, Capital, Labour, Enterprise✅✅✅
Consumer Goods - products bought by consumers to satisfy their wants✅✅✅
The two types of consumer goods - durable consumer good which can last a long time and a non-
durable consumer good which does not last long.✅✅✅
Capital goods - Man made resources produced by labour which can help in the production of other
goods and services.✅✅✅
Public goods - a good is offered by the government since no private firm would be willing to produce
it✅✅✅
Merit goods - a good/service offered by the government since it feels that people need them regardless
whether they can pay for them✅✅✅
Private wealth - goods and services owned by entrepreneurs and people in the private sector✅✅✅
Social wealth - goods and services owned by the government in the public sector✅✅✅
National wealth - both private and social wealth.✅✅✅
Earned income - money earned while working (wage/salary).✅✅✅
, Unearned income - money generated from assets and wealth (no working required)✅✅✅
Resource allocation - how much factors of production are used in the production of a particular
good/service.✅✅✅
Economic system - Used to answer a countries three economics questions, what, how, and for
whom✅✅✅
The free market system - both producers and consumers determine what and for whom they produce
goods✅✅✅
The main aim of entrepreneurs - Profit✅✅✅
The price mechanism - used by entrepreneurs to decide what to produce✅✅✅
Average product - =total product/units of labour✅✅✅
Primary Industry - Raw materials are obtained, farming mostly.✅✅✅
Secondary industry - where materials are processed into goods and services, in factories.✅✅✅
Tertiary industry - when goods and services are then sold, shops etc.✅✅✅
Specialization - when a country is good at producing a certain good/service.✅✅✅
Division of Labour - when a workforce is separated for each to do a specific task in producing a good
or service.✅✅✅
Marginal Product - = Change in total product / change in total labour.✅✅✅
The law of diminishing returns - adding more units of factors of production give diminishing results
to total product.✅✅✅
Increasing returns - when added factors of production increase total output.✅✅✅
Fixed costs - costs that do not change as output changes✅✅✅
Variable cost - costs that increase per increasing output✅✅✅
Total costs - both fixed and variable costs✅✅✅
Average costs - total costs/ output✅✅✅
Total revenue - the price of goods multiplied by the quantity of goods✅✅✅
Covering Markets, Production, Costs, Revenues,
Labour, Demand, Supply, Elasticity, and Firms
Opportunity cost - A cost of choosing one thing over the next best alternative.✅✅✅
The economic problem - The idea that resources are scare and wants are unlimited✅✅✅
Economy - Where people produce goods and services.✅✅✅
Market - Where a group of people willing to exchange goods and services meet.✅✅✅
Perfect market - Neither Consumer/producer solely influence the price charged for goods and
services✅✅✅
Imperfect market - a powerful consumer or producer can influence prices✅✅✅
The four factors of production - Land, Capital, Labour, Enterprise✅✅✅
Consumer Goods - products bought by consumers to satisfy their wants✅✅✅
The two types of consumer goods - durable consumer good which can last a long time and a non-
durable consumer good which does not last long.✅✅✅
Capital goods - Man made resources produced by labour which can help in the production of other
goods and services.✅✅✅
Public goods - a good is offered by the government since no private firm would be willing to produce
it✅✅✅
Merit goods - a good/service offered by the government since it feels that people need them regardless
whether they can pay for them✅✅✅
Private wealth - goods and services owned by entrepreneurs and people in the private sector✅✅✅
Social wealth - goods and services owned by the government in the public sector✅✅✅
National wealth - both private and social wealth.✅✅✅
Earned income - money earned while working (wage/salary).✅✅✅
, Unearned income - money generated from assets and wealth (no working required)✅✅✅
Resource allocation - how much factors of production are used in the production of a particular
good/service.✅✅✅
Economic system - Used to answer a countries three economics questions, what, how, and for
whom✅✅✅
The free market system - both producers and consumers determine what and for whom they produce
goods✅✅✅
The main aim of entrepreneurs - Profit✅✅✅
The price mechanism - used by entrepreneurs to decide what to produce✅✅✅
Average product - =total product/units of labour✅✅✅
Primary Industry - Raw materials are obtained, farming mostly.✅✅✅
Secondary industry - where materials are processed into goods and services, in factories.✅✅✅
Tertiary industry - when goods and services are then sold, shops etc.✅✅✅
Specialization - when a country is good at producing a certain good/service.✅✅✅
Division of Labour - when a workforce is separated for each to do a specific task in producing a good
or service.✅✅✅
Marginal Product - = Change in total product / change in total labour.✅✅✅
The law of diminishing returns - adding more units of factors of production give diminishing results
to total product.✅✅✅
Increasing returns - when added factors of production increase total output.✅✅✅
Fixed costs - costs that do not change as output changes✅✅✅
Variable cost - costs that increase per increasing output✅✅✅
Total costs - both fixed and variable costs✅✅✅
Average costs - total costs/ output✅✅✅
Total revenue - the price of goods multiplied by the quantity of goods✅✅✅
