Flashcards
Basic Economic problem (unit 1)
Cards in this deck (20)
- 1What is the basic economic problem?Scarcity
Unlimited wants (always increasing)
Limited resources - 2What is an opportunity cost?The next best thing/ alternative forgone
- 3What are the factors of production? Define (4)Land- everything in and on the land
Labour- human capital
Capital- human machinery
Enterprise- risk takers - 4What is the definition of efficiency?Maximising the use of scarce resources
- 5What is a positive approach?The resource combination which provides the most effective outcome (satisfies the most people)
- 6What is a normative approach?Involves a value judgement
- 7What is ceteris paris?Everything else stays the same
- 8What does a PPF show?Maximum produce combinations available
- 9What is opportunity cost like on a linear PPF? (2)Constant, we always give up the same quantity of one good in order to gain a certain amount of another
- 10What are factors of production (in terms of substition)Imperfectly substitutable as opportunity cost increases as you move out of production of one good and into another
- 11What factors can cause the PPF to shift outwards? (4)Increased labour force
Increased quality of labour
Changes in technology (increase productivity)
More capital - 12What factors can cause the PPF to shift inwards?Wasted resources
Natural Disasters
War - 13What is a non parallel shift PPF?Country's ability to produce capital goods has increased but ability to produced consumer goods has stayed the same
- 14How can a country produce outside its PPF?Through specialisation and trade
Can export goods in exchange for different goods by trading with a country that specialises in those goods - 15What is a term when trading with another country?The rate of exchange must be more beneficial than he domestic opportunity cost.
- 16What is production efficiency?Production minimising waste (and cost) and minimising use of resources
- 17What is allocative efficiency?Producing what society wants, meeting as many needs/wants as possible
- 18What is pareto efficient?No one is made worse odd when others are made better off
- 19How many PPFS5
- 20Where is productively efficient on a PPF?Any point of production on the PPF
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- AS - Level Micro (Economic Problem) Flashcards on Basic Economic problem (unit 1), created by Maya Khangura on 15/02/2016.
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- Maya Khangura
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