4.1.1

Question 1

Normative Statements

Answer 1

Statement based on a value judgement

Question 2

Positive Statement

Answer 2

A statement based on facts and can be proven to be right or wrong

Question 3

Define Need

Answer 3

A core component for human survival

Question 4

Define want

Answer 4

Something which people feel improves their standard of living

Question 5

Economic welfare

Answer 5

The standard of living or general wellbeing of people in survival

Question 6

Economic activity

Answer 6

Is about the production of goods and services to satisfy needs and wants

Question 7

Key economic decisions

Answer 7

What to produce
How to produce it
Who is to benefit from goods and services

Question 8

Command economy

Answer 8

100% public ownership with communist idelology

Question 9

Free market economy

Answer 9

100% private ownership and pure free market economy

Question 10

Production

Answer 10

The process of combining scarce resources into a finished product- a good or service

Question 11

Factors of production

Answer 11

Land
Labour
Capital
Enterprise

Question 12

Basic economic problem

Answer 12

Economic resources are scare compared with the unlimited wants of society

Question 13

Opportunity cost

Answer 13

Opportunity cost is defined as the cost of foregoing the next best alternative

Question 14

Economic good

Answer 14

Has an opportunity cost when consumed like a bottle of water

Question 15

Free good

Answer 15

Has zero opportunity cost of consuming like air

Question 16

The environment as a scare resource

Answer 16

• limited quantity of the environment
• unlined envirometal wants
• Not a free good
• Has an opportunity cost to use
• climate change is the opportunity cost

Question 17

Factors causing an outward shift of the PPC

Answer 17

Technological improvements that lead to increased productivity of capital equipment
Discovery of new resources
Improvements in education and resources
Changes that lead to an increase in increase in working population

Question 18

Factos causing and inward shift in the PPC

Answer 18

Disasters
changes decreasing factor of production and decreasing working population
Prolonged recession leading to loss in productive capacity
Climate change impacting land as a factor of production

Question 19

Productive efficiency

Answer 19

When maximum output is produced from the availability of the factors of production and it is not possible to produce any more of a good without producing less of another

Question 20

Allocative efficiency

Answer 20

When an economics factors of production are used to produce the combination of goods and services that maximises society’s welfare