Economics - unit 1

What is the basic economic problem and what is the cause?

Give 2 examples of the basic economic problem in everyday life.

What is the consequence arising from the basic economic problem?

What is the disadvantage of using money as a control mechanism to allocate scarce resources?

What is the disadvantage of using the government as a control mechanism?

What is the purpose of economic activity?

Define an economic good.

Give 3 examples of an economic good.

Define a free good.

Give 3 examples of a free good.

What is meant by factors of production?

What does land represent as a factor of production?

What is the difference between renewable and non-renewable resources?

What does labour represent as a factor of production?

Which factors determine the quality of the workforce?

Which factors determine the quantity of the workforce available?

What does capital represent as a factor of production?

What is working capital?

What is fixed capital?

What does capital represent as a factor of production?

What are the 2 forms of enterprise?

What are economic agents?

What are the objectives of individuals as economic agents?

What are the objectives of firms as economic agents?

What are the objectives of governments as economic agents?

What is the Production Possibility Frontier (PPF)?

Why is the PPF curved in shape?

What do points on the PPF mean?

What does a point inside the PPF represent?

What does a point outside the PPF mean?

Define opportunity cost.

What is the difference between a positive and a normative statement?

Define production.

What is the primary economic sector of production?

What is the secondary sector of production?

What is the tertiary economic sector of production?

According to Adam Smith, the father of economics, how can production output be increased?

What is division of labour and what is the consequence?

How can specialisation increase productivity of workers?

How can the increased use of capital equipment increase output in production?