1.1.2 Flashcards
What is Economic Welfare?
The benefit gained by individuals, firms, or society in the production of goods and services through the meeting of needs and wants.
What is the central purpose of economic activity?
The production of goods and services to satisfy needs and wants.
What are the key economic decisions?
What to produce.
How to produce.
For who to produce.
What are needs?
Things that are essential to maintain survival.
What are wants?
Things that are desired but not essential to survival.
Does economic activity always improve economic welfare?
No, because often for a firm or individual to benefit another will lose out e.g. lower prices mean lower wages.
What do economic incentives do?
Provide economic agents with the information to tell them what goods and services to produce.
What are economic agents?
The individuals and firms that partake in economic activity.
What is economic activity?
The demand for (from consumers) and supply of (from firms) goods and services.
What will firms combine to produce a good or service?
The factors of production.
In what kind of market does supply occur according to demand and in order to make Profit?
A free market.
