Economics Concepts

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Supply and Demand

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Supply is the amount of a product available, and demand is how much people want it. When demand increases, prices rise. If supply decreases, prices also rise. Example: If a storm damages apple orchards, fewer apples are available (low supply), so the price of apples goes up.

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Productivity

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Productivity is about doing more with fewer resources, like using machines to produce faster or more efficiently. Example: A factory that uses robots instead of people can produce more goods in less time, helping lower prices.

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Poverty

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Poverty means not having enough money to meet basic needs like food, housing, and healthcare. Example: A family struggling to pay rent or buy food is living in poverty, common in areas with limited access to jobs and education.

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Debt

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Debt is borrowed money that must be paid back. It can be useful but becomes a problem if unpaid. Example: If someone takes out a loan to buy a car but can't pay it back, they may face financial trouble or have to sell the car.

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Labour

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Labor refers to the workers who contribute to producing goods and services. Example: Factory workers assembling products are labour.

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Capital

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Capital includes tools, machines, and buildings used to produce goods. Example: The machines in a factory are capital because they help create products.

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Scarcity

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Scarcity means there’s a limited amount of something, making it more valuable. Example: Gold is scarce, so it’s expensive and often used as an investment.

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Per Capita

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Per capita means 'per person,' often used to describe average income or resources. Example: The per capita income in NZ. is around $48,400, meaning the average income per person is $48,400.

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Budget

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A budget is a plan for how to spend money. Example: A personal budget might include rent, groceries, and transportation costs.

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Surplus

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Surplus happens when income is more than spending. Example: Let’s say you have $20, but you only need $15 to buy a pizza. The extra $5 you didn’t spend is your surplus. You can save that money or use it for something else!