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Economics > Basic economic ideas and resource allocation (AS level) > Flashcards

Basic economic ideas and resource allocation (AS level) Flashcards

1
Q

Basic economic problem

A

Scarce resources but unlimited wants

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2
Q

Resources

A

inputs available for the production of goods and services

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3
Q

Wants

A

the goods and services that people may like to have but are not always realised

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4
Q

Needs

A

things that are necessary for survival, such as food

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5
Q

Scarcity

A

a situation in which wants and needs are greater than the resources available

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6
Q

Choice

A

resources are scarce so individuals, firms, and governments have to consider alternatives.

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7
Q

Factors of production

A

resources or inputs available in an economy that are used in the production of goods and services.

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8
Q

Firm

A

any business that hires factors of production to produce goods and services

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9
Q

Opportunity cost

A

the cost expressed in terms of the next best alternative that is foregone when a choice is made.

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10
Q

Macroeconomics

A

the study of an economy or a group of economies

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11
Q

Microeconomics

A

the study of individuals markets (households and firms)

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12
Q

Model

A

a simplified view of reality used to explain economic problems and issues.

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13
Q

Positive statement

A

a statement that is based on facts or actual evidence

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14
Q

Normative statement

A

a statement that is based on the economist’s opinion or value judgement and which cannot be proven

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15
Q

Ceteris Paribus

A

phrase meaning other things unchanged; used by economists to model the effects of one change at a time.

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16
Q

Short run

A

time period when a firm can change at least one but not all factor inputs

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17
Q

Long run

A

time period when all factors of production are variable but with a constant, such as the state of technology.

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18
Q

Very long run

A

time period when all key inputs into production are variable

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19
Q

Entrepreneur

A

an individual who seeks out new business opportunities and is willing to take risks.

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20
Q

Land

A

a factor of production; natural resources in an economy

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21
Q

Labour

A

a factor of production; human resources available in an economy

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22
Q

Capital

A

a factor of production; a physical resource made by humans that aids the production of goods and services.

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23
Q

Enterprise

A

as a factor of production, enterprise involves organising production and taking risks.

24
Q

Physical capital

A

factors of production such as machinery, buildings and innfrastructure

25
Q

Economics growth

A

in the short run, an increase in the country’s output and, in the long run, an increase in a country’s productive potential.

26
Q

Human capital

A

the value of labour to the productive potential of an economy.

27
Q

Specialisation

A

the process by which individuals, firms and economies concentrate on producing those goods and services where they have and advantage over others.

28
Q

Division of labour

A

where a manufacturing process is split into a sequence of individual tasks

29
Q

Economic system

A

The way in which production is organised and choices are made in an economy

30
Q

Market economy

A

an economic system where most decision are taken through the market mechanism.

31
Q

Planned economy

A

an economic system where resources are state-owned and allocated by the central body

32
Q

Mixed economy

A

an economic system where both market forces and government are involved in resource allocation decisions

33
Q

Market mechanism

A

resource allocation decisions are taken by individual producers and consumers with no government intervention; also knows as price mechanism

34
Q

Productive resources

A

resources that are available to be used

35
Q

Private sector

A

that part of an economy under private ownership

36
Q

Public sector

A

that part of an economy under government ownership

37
Q

Privatisation

A

where there is a change in ownership from the public to the private sector

38
Q

Emerging economy

A

one that is making quick progress towards becoming a high-income economy

39
Q

Asian tiger economy

A

export-led, high growth economies in Asia

40
Q

Production possibility curve

A

a simple representation of the maximum level of output that an economy can achieve, given its current resources and state of technology

41
Q

Trade-off

A

what is involved in deciding whether to give up one good for another good

42
Q

Productive capacity

A

the maximum output that can be produced when all resources are used fully

43
Q

Excludability

A

where it is possible to stop someon from consuming a good or service

44
Q

Rilvalry

A

where consumption by one person of a good or service reduces the availability of the good or service for others

45
Q

Non-rival

A

Where consumption by one person does not reduce consumption by one person does not reduce consumption

46
Q

Private goods

A

goods that are consumed by one person and not available to anyone else

47
Q

Free goods

A

goods that are not scarce and have zero opportunity cost

48
Q

Public good

A

a good that is non-excludable and non-rival

49
Q

Non-excludable

A

a situation where it is not possible to stop anyone else from using a good

50
Q

Pure public good

A

good which is both non-excludable and non-rival

51
Q

Quasi-public good

A

good that has some but not the full characteristics of a public good

52
Q

Free rider

A

someone who does not pay to use a public good

53
Q

Merit good

A

a good that is thought to be desirable for consumers but which is underprovided by the market because of information failure

54
Q

Demerit good

A

a good that is thought to be undesirable for consumers and is over-provided by the market because of information failure

55
Q

Information failure

A

a situation where consumers do not have full or complete information when making decisions

Economics (11 decks)

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