15 Mark corrections

Question 1

The central purpose of production of goods and services

Answer 1

To satisfy consumer wants

Question 2

Specialisation

Answer 2

The concentration of production on a narrow range of goods and services. Could be economies, firms or workers specialising.

Question 3

Specialisation strengths

Answer 3

Higher output so more choice for consumers, better quality of goods and higher productivity (workers used to max output, lower COP)

Question 4

Specialisation weaknesses

Answer 4

Change in trend could use demand away from firms (higher unemployment, lower profits) and could use up more finite resources (may limit future production)

Question 5

Positive externality

Answer 5

Occurs when the consumption and production of a good causes external benefit e.g. waling instead of driving benefits society by lowering pollution levels. Social benefit>Private benefit. Social costs<Private costs

Question 6

Negative externality

Answer 6

Occurs when the production/consumption of a good causes harm (external cost) to a 3rd party. e.g. playing loud music at night keeps your neighbour awake. Social costs>Private costs. Social benefit<Private benefit.

Question 7

Disequilibrium

Answer 7

Occurs when there is excess supply or demand in a market

Question 8

Excess demand

Answer 8

When demand is greater than supply. Caused by maximum price. (short run disequilibrium with excess demand)

Question 9

Excess supply

Answer 9

When supply is greater than demand. Caused by minimum price. (short run disequilibrium with excess supply)