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Description
Flashcards by Nikolas Reece, updated more than 1 year ago
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Created by Nikolas Reece
about 8 years ago
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| Question | Answer |
| Economics | a social science concerned the production, distribution and consumption of goods and services in order to satisfy man’s unlimited wants with limited resources. |
| "Social Science" | the study of human behaviour |
| Economics as a social science is concerned with the _________, __________ and ___________of goods and services | production; distribution and consumption |
| Economics is a social science concerned with the __________ of scarce resources and the creation of ______. | allocation; wealth |
| economy (economic system) | A network of organisations designed within a country to solve the economic problem. |
| The two major branches of study of economics are: | macroeconomics and microeconomics |
| macroeconomics | Economic factors which impact the entire economy such as inflation, unemployment and economic growth. |
| microeconomics | Economic factors which impact the the behaviour of individual and firms. |
| The three main economic agents are: | Government; households and firms. |
| needs | any goods and services that are essential for life eg. Food, shelter. |
| wants | goods and services that are desired to improve the quality of life but are not essential eg. Cellphone |
| trade-offs | The process of deciding whether to give up some of one good or one objective to obtain more of another. The need to trade off goods or objectives against one another is a sign of economic efficiency. |
| public goods | provided by the government for public consumption eg street lighting. - non-excludable (free rider) - non-rival in consumption |
| Free rider | A person or organisation that benefits from a public good, but neither provides it nor contributes to the cost of collective provision. |
| merit goods | goods or services provided by govt and private sector which provide important benefits to the consumer and society eg education healthcare Rivalry in consumption - Excludable |
| scarcity (the MAIN economic problem) | unlimited wants but limited resources. |
| choice | the selection made from a range of options available. a choice has to be made because of limited resources. |
| opportunity cost | The cost of the alternative foregone when making a choice |
| money (monetary) cost | the dollar cost of what was paid for a good or service |
| factors of production | the main economic resources used to produce goods and services which include: land, labour, capital and entrepreneurship |
| describe the production possibility frontier | a graph showing the various combinations of any two goods that an economy is capable of producing |
| attainable and efficient | Points A, B & C produce the maximum possible combinations of goods and are both attainable AND efficient. |
| attainable but inefficient | any point below the PPF which indicates that there are idle resources |
| unattainable | any point beyond the PPF due to scarcity of resources. |
| factors that will cause outward shift | Discover of new resources Technology progress Improvements in labour productivity Growth in working population |
| factors that will cause inward shift | War, major political instability Depletion of natural resources Major Natural disasters Mass migration of workers |
| describe the pivoted PPF | pivoted shift - factors which change the output of ONLY ONE of the two products in the economy. |
| Factors affecting the economic decision of households | personal choice, fads & fashion, size of income education levels |
| factors affecting the economic decision of firms | costs of production, profits, resources available interest rates |
| The Three types of opportunity cost are: | increasing, decreasing and constant |
| increasing opportunity cost (convex shape) | when the production of one good increases, there is an increase in opportunity cost of producing the other. (i.e. more and more of the other good is given up) |
| calculating increasing opportunity cost | |
| describe decreasing opportunity cost (concave shape) | as you continue to increase production of one good, the opportunity cost of producing that next unit decreases (meaning that you give up less and less of one in order to obtain the other). |
| describe constant opportunity cost | When production of one good increases the opportunity cost of producing that next unit changes proportionately (meaning that you give up the same amount in order to obtain the other |
| The main economic objective of economic agents | Consumers - maximise satisfaction producers - maximise profits government - welfare of citizens |
| Economic goals | These refer to the aims or objectives that an organisation or the government wishes to achieve during the course of its activities, for example, two objectives of a government are to achieve high employment and to reduce the level of inflation. |
| resources | Anything, for example, skills, products and money that can contribute to economic activity. |
| efficiency | Economic efficiency implies an economic state in which every resource is optimally allocated to serve each individual or entity in the best way while minimizing waste and inefficiency. |
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