Economics Cie

Frage	Antworten
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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