3.1.1-Economic foundations Flashcards
What are capital goods?
Goods used to run a business and to produce other goods-not consumed in their own right
What are consumer goods?
Goods that are wanted because they provide satisfaction to the user
What are consumers?
People who purchase goods and services
What is consumption?
The use of goods and services
Who are entrepreneurs?
Individuals that set up a business and take risks in doing so
What are goods?
A product that can be seen or touched i.e. is tangible
What are markets?
A place where people can meet to facilitate the transaction of goods (it can be visible or invisible)
What are needs?
Requirements for continued existence
What is a producer?
A person or a company that produces goods or services for sale
What are services?
Products that can’t be seen or touched i.e. is intangible
What is an SME?
Small to Medium sized Enterprises
What are wants?
The desires that people have that are not necessary for their existence-luxuries
What is capital?
Man made goods used in the production process
What is enterprise?
The risk and decision making associated with organising factors the other 3 of production in the production process, who
What are Factors of Production?
The resources in an economy used to make goods and services-land, labour, capital and enterprise
What does finite mean?
Having an end or a limit
What is labour?
The human effort (mental and physical) required to produce something
What is land?
The natural resources used to produce something
Whats is the basic (central) economic problem?
An economy’s finite resources are insufficient to satisfy all human wants and needs
What is opportunity cost?
Something we give up when we make a decision-the cost of the next best alternative
What are resources?
Services or assets used to produce goods and services that meet human needs and wants
What is scarcity?
Limited availability of resources (ones that will run out eventually), not enough to satisfy all wants
What is utility?
The benefit gained from consuming a product
What are the key economic decisions?
- What to produce
- How to produce
- Who is to benefit from production
What is the purpose of economic activity?
The production of goods and services to satsify all needs and wants
What are the main economic groups and how do they interact?
- Consumers-demand goods and services from producers
- Producers-supply the goods and services to consumers
- Government-regulates interactions between consumers and producers and provides public goods and services.
What are reasons why consumers do not maximise their benefits?
- Cosumers are not always goods at calculating their benefits-imperfect information
- Consumers have habits that are hard to give up (addiction)
- Consumers sometimes copy others’ behaviors
What are reasons why producers do not maximise their benefits?
- Producers may wish to maximise sales-by lowering prices and profits firms can increase their market share-this increases monopoly power and can force rivals out of business
- Producers may prioritise caring for customers/wider community
- Producers may complete charitable work
