1A

Question 1

What is the economic problem

Answer 1

There are unlimited wants but only limited resources.

Question 2

What are the three economic questions

Answer 2

What? what goods and services should be produced.
How? How should resources be used to produce goods
For whom? How should these goods be allocated among the population.

Question 3

What are the three economic agents

Answer 3

Consumers- Households and individual buyers
Firms-Produce the output of goods and make choices about what and how they produce.
Government- Makes choices about its expenditure in an economy and can also influence the economy through various tools such as taxation.

Question 4

What are factors of production

Answer 4

Resources used in the production process.

Question 5

What is a capital factor

Answer 5

Man made aids to production, e.g machinery, buildings and tech.

Question 6

What is enterprise factor

Answer 6

Where an individual takes the risk and organises the other factors of production in the production process, main reward is profit.-entrepreneur and have a business idea.

Question 7

What is labour factor of production

Answer 7

The human resource available for use as workers in the production process, resources is affected by the quantity and quality of human resources.

Question 8

What is land factor of production

Answer 8

The natural resource that can be used for production in an economy. e.g oil, sea and land itself.

Question 9

What is a renewable resource and a non

Answer 9

Natural resource that can be replenished, Natural resource that once used cannot be replenished such as coal and oil.

Question 10

What is marginal analysis

Answer 10

An approach to economic decision making based on considering the additional benefits and costs of a change in behaviour.

Question 11

what is ceteris paribus

Answer 11

All other factors remain constant

Question 12

What is an economic model

Answer 12

A simplified representation of reality used to provide insight into economic decisions and events.

Question 13

What are limitations of models

Answer 13

Many assumptions are made which could be wrong, can not predict un expected events.

Question 14

What are positive statements

Answer 14

Statements that can be verified tested or rejected by referring to data.

Question 15

What are normative statements

Answer 15

Statements that cannot be verified by data and that use value judgements.

Question 16

What is opportunity costs

Answer 16

In decision making the value of the next best alternative forgone

Question 17

What is a PPF

Answer 17

A curve showing the maximum combinations of 2 goods or services that can be produced in a given period with alternative resources.

Question 18

What is any point inside the PPF

Answer 18

Resources are not being fully uitlised

Question 19

What is any point outside the PPF

Answer 19

UN obtainable within the current level of resources

Question 20

What is economic growth

Answer 20

An expansion in the productive capacity of the economy.

Question 21

What is division of labour

Answer 21

Where the production process is broken down into stages and workers are allocated to a particular stage.

Question 22

Ads and Dis of division of labour

Answer 22

Ads- Higher output, quicker to train workers, lower training costs, less waste, more efficient.
Dis- Less output due to boredom, quality trade off, less variety in jobs.

Question 23

What is specialisation

Answer 23

Concentration on a single? Narrow range of goods and tasks. Resulting in workers becoming more skilled, due to repetition of task, resulting in lower cost for the firm. so more potential profit.

Question 24

what is a market

Answer 24

Where buyers and sellers are bought together to trade goods and services.

Question 25

What is a free market economy

Answer 25

An economy in which market forces are allowed to guide the allocation of resources and there is no state intervention. adv- Higher wages, lower taxes. dis- excessive power of firms, inequality

Question 26

What is a command economy

Answer 26

An economy in which decisions and resources allocation are guided by the government. adv- low unemployment, aquality.
dis– lack of innovation.