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Basic economic concepts Flashcards

1
Q

Economics

A

social science that studies how society behaves in meeting their unlimited needs and wants to be faced with limited resources

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2
Q

Micro-Economics

A

Study of the behavior and decisions of individual participants in the economy. Includes how prices are determined

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3
Q

Macro economics

A

Study of the sum of economic activity inclusive of regional , national and int. study fields

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4
Q

Equitability

A

Being fair on the allocation of economic resources

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5
Q

Opportunity cost

A

Value of the next best alternative. The cost of making choices

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6
Q

Ceteris paribus

A

all other things being equal

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7
Q

Normative statement

A

economic statement based on individual opinion

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8
Q

Positive Statement

A

economic statement that is objective and can be tested

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9
Q

Scarcity

A

when we have limited economic resources and unlimited needs and wants

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10
Q

Absolute scarcity

A

when it is no economic resource to meet needs and wants

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11
Q

Relative scarcity

A

when the available resource has more than one use at the same time

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12
Q

Choice

A

Doing one activity and not another

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13
Q

Price theory

A

looks on how prices can be formed by means of market forces

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14
Q

Efficiency

A

Where economic resource is best allocated and put to their productive use

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15
Q

what is the economic problem?

A

Once people’s needs are met they have endless wants which cannot be satisfied due to limited resources

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16
Q

Economy

A

Area in which people manufacture or produce goods and services

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17
Q

4 factors of production

A

Land
Labour
Capital
Entrepreneurship

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18
Q

4 Economic systems (explain)

A 
Traditional economy (hierarchy determines the allocation of resources)
Command economy (Authorities decide on the production and allocation of resources. Allocated according to the gov. plan)
Market economy (Private ownership is important. Market place and individual choice determine the production and distribution of products)
Mixed economy (Combo of market and command. SA a good example)
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19
Q

economic elements 4

A

Scarcity
Choice
Efficiency
Equitability

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20
Q

6 Branches of economics

A 
Monetary economics
International Economics
Public Sector Economics
Development economics
Labor economics
Environmental economics
Regional economics
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21
Q

Monetary economics

A

Study of money. Looks at how money is controlled and how it is used as a product in the exchange process

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22
Q

International Economics

A

The study of international trade and finance

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23
Q

Public sector economics

A

Pays attention to decisions and policies made by a country’s government. Also considers government income budget and expenditure.

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24
Q

Development economics

A

focuses on strategies and policies that help countries develop and grow

25
Labour economics
Studies the demand and supply of labor and its effects on the economy of a country
26
Environmental economics
Looks at issues that affect the environment
27
Regional economics
The study of certain geographical regions in a country responsible for the production of goods and services
28
Approaches to economics breaks the study down into...(2)
Micro and macroeconomics
29
Micro and Macroeconomics
Micro- looks at individual decisions. Considers individuals' demand a product at a certain price. Macro- Study of the economy as a whole and deals with issues like unemployment, Inflation, Growth, Monetary and fiscal policy.
30
Economic model
An attempt to explain or predict how a set of circumstances will behave if a variable changes
31
Positive Statement
deals in facts. It can be proved/disproved by looking at the facts
32
Normative Statement
Deals with opinions on what ought to be. They can be debated or argued but cant be settled with facts.
33
Empirical science
Creates explanations by interpreting data from past events and experiences rather than from thinking
34
The Scientific method
They formulate a question They conduct an investigation They draw a conclusion This process is known as deduction
35
Difficulties faced by economics (6)
- People all think and behave differently - It is difficult to run a controlled test to see how people will react to change - It is difficult to change one variable and keep others constant - Economists are often biased and disagree - Results are less precise than in physical science - Economic laws are more like statements than laws, they are not exact.
36
Model
A practical way of making theories more concrete in a verbal or mathematical description
37
Theory
A generalization. A broad statement based on a specific set of data
38
economics has most in common with (4)
Accounting Business studies commercial law mathematics of finance
39
Career opportunities using economics can be found in (7)
``` Statistics Mathematics Information technology Law Politics Sociology Geography ```
40
Difference between absolute and relative scarcity
Absolute-People have the means to buy the product but there is not enough of the product to buy Relative- More than enough of the product available but not enough resources available to purchase them.
41
Free goods
things that are plentiful and have no price. everyone has access to them.
42
Economic goods
goods produced from scarce resources and for which there are costs and a final price. Have exchange value as people are prepared to pay for them.
42
Economic goods
goods produced from scarce resources and for which there are costs and a final price. Have exchange value as people are prepared to pay for them.
43
Economic principal of opportunity cost
when we have a choice to make, economists measure the cost of the thing chosen in terms of the cost of the alternative that has been given up. This is called opportunity cost
44
welfare and prosperity of a country depends largely on what
The volume of production within it
45
Production
The process whereby an entrepreneur combines available resources and turns them into some sort of product that is used to satisfy the wants and needs of the population
46
Direct production
When the producer and consumer are the same
47
Indirect production
producer and consumer are different.
48
Specialization and division are seen as tools to solve what
the scarcity problem
49
Specialization
When a business specializes in the production of one product
50
Division of labour
when each worker specializes in doing a particular job
51
Globalization
The result from world specialization igniting international trade and commerce
52
Capital intensive production
Use more machinery than workers
53
Labour intensive production
Lots of workers and not much machinery
54
immediate consumption
when a product is used up or destroyed when an individual uses it
55
Deferred consumption
when you buy product that can be used over and over to satisfy your needs
56
Exchange
processes also known as trade and found in markets
57
4 types of markets
wholesailers retailers service market international market

Economics Term 1 (6 decks)

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