1.1 : PPF, OP COST, SPECIALISATION, ECON SYSTEMS

Question 1

Scarcity

Answer 1

Infinite wants and needs but only finite resources to produce

Question 2

Opportunity Cost

Answer 2

The cost of the next best alternative that you forgo

Question 3

Factors of Production

Answer 3

Resources/input needed to make good and services

Question 4

FOP: Land

Answer 4

They are natural resources that are classified as renewable and non renewable

Question 5

FOP: Labour

Answer 5

Human efforts that are either skilled or non skilled which require mental or physical effort

Question 6

FOP: Capital

Answer 6

Man made resources used to help produce good or services.

Question 7

FOP: Enterprise

Answer 7

The person that undertakes the idea and risk to sell products, usually manages the other 3 FOP.

Question 8

Consumer Goods

Answer 8

Used directly for consumer satisfaction and consumption

Question 9

Capital Goods

Answer 9

Goods that are used in producing other goods, increase the production capability of a firm/country.

Question 10

Free Goods

Answer 10

Goods that do not incur opportunity cost because they are abundant in nature.
Eg: air, sunlight, wind, websites

Question 11

Economics Goods

Answer 11

Goods that incur opportunity cost in their production. They are rivalrous in consumption and excludable in nature. Most goods fall under this including Capital and Consumer Goods.

Question 12

Production Possibility Curve (PPC)

Answer 12

It is a curve that shows the max combination of 2 goods that a country can produce, with all resources being fully and efficiently utilised holding technology constant.

Question 13

Economic Growth

Answer 13

Increase in the production of goods and services over a specific duration of time.

Question 14

Economic Inefficiency

Answer 14

When an economy is operating below its potential (PPC) , resources are yet to be fully and efficiently utilised.

Question 15

Specialisation

Answer 15

When individuals, firms areas or countries focus in the production of a particular good or service.

Question 16

Division of Labour

Answer 16

It is when a completed task is broken down into many smaller parts, each done repetitively by a group of workers or individual to increase productivity.

Question 17

Positive Statement

Answer 17

Factual and can be tested or verified. Either right or wrong.

Question 18

Normative statement

Answer 18

Subjective and contains value judgement. Can be both right and wrong, normally uses words like “should, ought to, unfair”.

Question 19

Money

Answer 19

Anything that can be generally accepted to perform the function of a medium of exchange,

Question 20

Free Market Economy

Answer 20

A free market economy is based on supply and demand where prices are set freely between seller and consumer (market forces), without intervention from the government.

Question 21

Centrally Planned Economy / Command Economy

Answer 21

In a command economy, it is the government that decides what to produce, how to produce goods and how to distribute goods and services within the economy.

Question 22

Mixed Economy

Answer 22

Economic system in which resources and production are partially allocated by the state and the private sectors.

Other Definition:
An economy that has government intervention whilst letting the supplier and consumer forces determine the market equilibrium