5330181
Description
Flashcards by Sophie Knight, updated more than 1 year ago
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Created by Sophie Knight
over 8 years ago
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| Question | Answer |
| What is a positive statement? | A statement that can be TESTED as true or false |
| What is a normative statement? | A statement concerned with value judgements and is a non-scientific approach to a subject |
| What role do value judgments have in economics? | Influence consumers and producers -Also influence governments with policy making |
| Why does scarcity exist? | there are insufficient resources to provide for everyones wants and needs, meaning that people always have to make choices |
| Name the 4 factors of production | 1. Land 2. Labour 3. Capital 4. enterprise |
| What do production possibility frontiers show? | The maximum potential level of output for two goods or services than an economy can achieve given the level of technology avaiable |
| If a country is operating on its PPF what does that mean? | That it is using all resources efficiently (efficient allocation of resources) |
| Give 4 reasons that the PPF would shift outwards | 1. Increase in resources 2. Expansion of higher education 3. Increase in investment 4. development in new technology |
| Give an example of something that would cause the PPf of a country to shift inwards | A natural disaster |
| What is an advantage of specialisation? | Increase in productivity and living standards across the world |
| When does specialisation have more disadvantages and what are they? | When demand for a product falls -increase in structural unemployment |
| How does the division of labour work? | Production is broken down into different smaller tasks given to workers, its a form of specialisation |
| Give 5 reasons for increased production due to specialisation | 1. Workers become highly skilled due to repetition 2. No time wasted moving from one job to another 3. Capital equipment can be used continuously 4. Quicker training 5. More choice in jobs for workers |
| What are 3 disadvantages of the division of labour | 1. Repetition causes monotony and boredom resulting in a high staff turnover 2. Makes people easier to replace with machines. 3. Specialisation creates interdependance in production so if one group of workers go on strike then the whole of production could be halted. |
| What are the 4 functions of money? | 1. Medium of exchange 2. Measure of value 3. Store of value 4. Method of deferred payment |
| Name 4 advantages of a free market economy | 1. Economic efficiency and lower prices cue to competition 2. Quality of products increases 3. Consumers get greater choice 4. Entrepreneurs have more incentive to invest |
| What are the 6 disadvantages of a free market economy? | 1. Monopolies form 2. Unequal distribution of income 3. External costs and benefits are often ignored 4. Information gaps exist 5. An insufficient quantity of public goods and services and merit goods 6. Erratic swings in the business cycle could cause inflation |
| Give 5 advantages of a command economy | 1. Cooperation between firms can lead to high output levels 2. Reduction in inequality 3. The government can limit external costs which can reduce pollution 4. More funding for public goods 5. Less unemployment and inflation |
| What are the disadvantages of a command economy? | The price mechanism cannot operate Inefficiency because of lack of competition Poor-quality goods Underperformance |
| Which economists supported: Free market economies Command Economies Mixed Economies | Free market ---> Adam Smith + Friedrich Hayek Command ---> Karl Marx Mixed ---> John Maynard Keynes |
| What is the role of the state in a mixed economy? | To correct any market failure and make markets more efficient through government intervention. eg. providing merit and public goods |
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