Economics Cie


A level Economics Flashcards on Economics Cie, created by Nora Maganga on 12/14/2017.
Nora Maganga
Flashcards by Nora Maganga, updated more than 1 year ago
Nora Maganga
Created by Nora Maganga over 6 years ago

Resource summary

Question Answer
Goods Physical objects that are tangible and satisfy human wants and provide utility
Services Intangible products
Wants Things that consumers would like to have but are not necessary for immediate physical survival
Needs Things/ products that we need for survival
Resources Goods used to produce other goods.
Scarcity An economic concept that means that there is an excess of wants and needs compared to the number of resources available.
If a good/service is scarce then... it must be paid for
Economic good any good or service that has a price and is being rationed
Free Good goods that aren't scarce and therefore and don't have to be paid for e.g air
Choice happens because there is scarce resources so resources have to allocated
Opportunity Cost the cost expressed in terms of the best alternative forgone
Do Free goods have O.C? No, because they are not scarce.
Do Economic goods have O.C Yes because they are scarce and if a g/s have o.c then it has to be relatively scarce
Utility a measure of usefulness and pleasure a consumer receives when they consume a product.
Total Utility The total satisfaction gained from consuming a certain quantity of a product
Marginal Utility The extra utility gained from consuming one more unit of a product
What is the basic economic problem The questions that society have to answer when wanting to produce. Include What to produce, how to produce and for whom to produce for.
What are the factors of production Land. Labour. Capital. Entrepreneurship
what is Land All raw materials and cultivated natural resource
What is Labour Human resources used in the production of goods and services
Capital The tools and technologies that are used to produce goods and services.
Physical capital The stock of manufactured resources e.g machinery and tools used to produce goods and services in the economy.
Human Capital The value of the workforce
What affects human capital Investment in education or healthcare
Entrepreneurship the innovation and creativity applied in the production of goods and services
What do Entrepreneurs do - take risks - organise the other factors of production to produce goods and services
Positive statements a statement that is based on actual evidence and can be proved wrong or right by looking at facts. It's an analysis of what is
Normative statements A statement which expresses a value judgement. It's an analysis of what ought to be.
consumption the process by which consumers satisfy their wants
Short run time period when a firm can only change some but not all factor inputs
Long run time period when all factors of production are variable
specialisation the process by which individuals, firms and economies concentrate on producing those goods and services where they have an advantage over others
Market where buyers and sellers get together to trade
Division of labour where a manufacturing process is split into a sequence of individual tasks
Economic stucture the way in which an economy is organised in terms of sectors
Economic system the means by which choices are made in an economy
Market economy one where most decisions are taken through market forces
Command or planned economy one where resource allocation decisions are taken by a central body
Mixed economy one where market forces and government, private and public sectors are involved in resource allocation decisions
Market mechanism where decisions on price and quantity are made on the basis of demand and supply alone
Production possibility curve a simple representation of the maximum level of output that an economy can achieve when using its existing resources in full
Reallocation of resources where resources are deliberately moved from one product to another
Factor mobility the ease by which factors of production can be moved around
Economic growth represented by a shift outwards of the PPC. Could be due to an increase in the quantity and/or the quality of resources available or an advance in technology
Capital consumption the capital required to replace that which is worn out
Investment the creation of capital goods
Developing economy one that has a low income per head
Money anything that is generally accepted as a means of payment
Near money non-cash assets that can quickly be turned to cash
Liquidity the extent to which there is an adequate supply of assets that can be turned into cash
Liabilities debt obligations
functions of money 1) A medium of exchange 2) A unit of account 3) A standard for deferred payment 4) A store of wealth
Private good consumed by someone and not available to anyone else
Rivalry when consumption by one person reduces availability for others
Public good A good which is non-rivalry and non-excludable and difficult to charge a direct price
Quasi-public good goods that have some but not all characteristics of a public good
Free rider someone who does not pay to use a public good
Merit good one that has positive effects when consumed
Demerit good one that has adverse effects when sonsumed
Information failure when people do not have the full or complete information
Paternalism a situation where society knows best and has some right to make a judgement
Adverse selection where information failure results in someone who is unsuitable obtaining insurance
Moral hazard the tendency for people who are insured or otherwise protected to take greater risk
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