Economics F581

Flashcards by leighrowland, updated more than 1 year ago
Created by leighrowland about 7 years ago


Flashcards on Economics F581, created by leighrowland on 02/20/2014.

Resource summary

Question Answer
Define the economic problem There are limited economic reasources to meet unlimited human wants.
Name & Explain the 4 factors of production LAND ~ includes all naural resources LABOUR ~ the human effort CAPITAL ~ manuactured resources which have been made in order to make things ENTERPRISE ~ brings together the other factors in order to produce a product profitably
Define opportunity cost The cost of a decision in terms of the beneits of the next best alternative forgone
Define specialisation occurs when indvidual workers concentrate on a particular task within the production process
What does a PPC curve show? The maximum potential output of 2 goods that can be produced in the current time period if all resources are eficiently employed
What causes an outward shift in production possibility curves? The quantity and/ or quality of its economic resources have increased
What causes an inward shift in production possibility curves? A decline i the quantity and/ or quality of its economic resources
What is a market economy? prices and the operation of the price mechanism create incentives that direct resources to where they are most needed
What is a command economy? The government takes control of resource allocation. All businesses are state ownd enterprises
What is a mixed economy? In reality all ecomonies are mixed. Resources are allocated through a combination of market forces and government direction
Define & Explain the 4 functions of money standard for deferred payment ~ arrange to pay for a good today for the future store of value ~does not lose its value for future payments unit of account ~ value goods in money terms medium of exchange ~ used t exchange goods and services
Define market wherever consumers and producers come together for the purpose of exchange
Define demand Refers to the quantity of a product that buyers are willing and able to buy at various prices over a period of time, ceteris paribus
Define consumer surplus the difference between the price a consumer actually pays for a product and the price they are willing to pay
Determinants of demand 1. Changes in price/availability of substitue goods 2. Changes in price/availability of complementary goods 3. Change in income of consumers 4. Changes in population 5. Expectations about future rice movements 6. Changes in tastes
Define supply refers to the quantity of a product that suppliers are willing and able to sell at various prices per period of time, ceteris paribus
Producer surplus The difference betwen the price that suppliers are willing and able to supply at and the price they actually get
Define price elasticity of demand the sensitivty f quantity demanded to a change in price
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