3.1.2 - The Nature and Purpose of Economic Activity Flashcards
What is a need?
Something that people must have, i.e. water, food, clothing etc.
What is a want?
A desirable, something that people would like to have.
What is welfare?
Human happiness.
What does pandering to human wants and needs cause?
The improvement of economic welfare.
How can economic welfare be skewed?
If a person consumes more material goods in the short term can improve current economic welfare, but in the long term, it can cause problems.
What is an economic system?
The set of institutions within a community that decides what, how and for whom to produce.
What are the two forms of economic mechanisms?
Command mechanism
Price mechanism
What economy does the command mechanism lead to?
Command economy
What economy does the price mechanism lead to?
Free market economy
What is a mixed economy?
An economy that contains both large market and non-market sectors.
What does a pure market economy do? (in regards to allocation of resources)
Price mechanisms allocate resources solely based on their value to society.
What is the term commonly used to describe China’s economy?
State-capitalism
When did the UK become a mixed economy?
Post WW2
What did the UK becoming a mixed economy involve?
Important industries such as coal, oil and gas were nationalised.
The NHS was set-up.
The 1944 Education Act extended state provision for education.
What was a problem with the 1944 Education Act?
Many poor parents had to turn down the “free” places as there were many extra costs involved.
What is x-inefficiency?
The lack of effective competition in an industry leading to higher costs.
