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MICROECONOMICS > 1.1 : The Economic Problem. > Flashcards

1.1 : The Economic Problem. Flashcards

In mocks, Revise.

1
Q

Definition : What is a Free Good?

A

Goods which have zero cost to obtain. E.G. Air.

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2
Q

Definition : What is a Economic Good?

A

Goods which have a cost to obtain. E.G. House.

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3
Q

What is the Economic Problem?

A

When wants are unlimited, but needs are limited.

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4
Q

Definition : What is Scarcity?

A

The excess of wants over what resources are available to use.

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5
Q

Definition : What is a Normative Statement?

A

Opinion based.

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6
Q

Definition : What is a Positive Statement?

A

Factual.

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7
Q

What are the three Economic Agents?

A

Firms, Households, Government.

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8
Q

What is the role of the Government?

A

Big employers, Charge/Spend taxes.

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9
Q

What is the role of the Households?

A

Consume goods and services.

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10
Q

What is the role of the Firms?

A

Provide goods and services.

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11
Q

What are the four Factors of production?

A

Land, Labor, Capital and Enterprise.

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12
Q

What is Land?

A

Limited, Raw Materials and the sea.

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13
Q

What is Labor?

A

Limited in workers and skill, Can increase through training.

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14
Q

What is Capital?

A

Man made goods to provide goods and services, increased by investment.

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15
Q

What is Enterprise?

A

Land, Labor and Capital combined to create goods and services.

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16
Q

What’s the reward for Land?

A

Rent.

17
Q

What’s the reward for Labor?

A

Wages.

18
Q

What’s the reward for Capital?

A

Interest.

19
Q

What’s the reward for Enterprise?

A

Profit.

20
Q

What happens when you make a choice?

A

You get a Trade off.

21
Q

What is a Trade-Off?

A

Choosing something and having to give up something for that to happen. E.G. Housing to either buy or rent.

22
Q

What is Rationaility?

A

Assumes that all induvial make decisions that provide them with the highest amount of personal utility. E.G. Going to poundland in a rescission is, but going to Waitrose would not be.

23
Q

What is the objective for Households?

A

Maximize Utility.

24
Q

What is the objective for Firms?

A

Maximize Profit.

25
Q

What is the objective for Government?

A

Maximize Welfare.

MICROECONOMICS (1 decks)

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