Basic Economic Principles And Terms Flashcards
What is a stakeholder?
An individual or group with a particular interest or influence on a particular activity
What are the four main stakeholders
Government
Firms
Workers
Consumers
What is GDP?
The value of goods and services provided by the economy
What outcomes do the governement want from the economy?
Good welfare and high quality of life for their population
Taxes paid honestly
An increasing GDP
Foreign investment
What outcomes do consumers want from the economy?
A wide range of products
Low prices and VAT
Readily available goods
What outcomes do workers want from the economy?
Fair working hours Work-life balance A variety of oppurtunities such as promotion A good wage Lower income taxes Job security
What outcomes do firms want from the economy?
Cost effective workers to decrease unit costs Lower coorporation tax Higher sale revenue Minimum costs Maximise profit
What are the factors of production and what do they mean?
Land
Labour
Capital
Enterprise
What is land and give examples
An area of available natural resources to produce products e.g fertile land, minerals, fish forestry
What is labour and what is the reward for it?
People available to work and do tasks, reward is wages
What is capital and what is the reward from it?
Capital is the stock of goods to make other goods like machinery. The reward is interest
What is enterprise and what is its reward?
Enterprise brings the other factors of production together into a complete production - ‘risk taker’. The reward is profit
What is the reward that comes from land?
Rent
How can capital be improved?
Technological advances, servicing and looking after equipment
How can enterprise be improved?
By having more information to help inform descions
How can we improve the use of land?
By using renewable resources like water
How can labour be improved so production capacity is increased?
Division
Education
What is the productive capacity?
When the maximum amount of the factors of prosuction are combined in their most efficient way
What is oppurtunity cost?
The next best alternative lost as a result of a person / group of people taking their first choice option
What are economic goods?
Goods which are scarce and therefore have an oppurtunity cost
What are free goods?
Goods which have no oppurtunity cost
What are capital goods?
Business goods which produce other goods and services
What are consumer goods?
Goods which are used up
What is economics?
The study of production, distribution and consumption of wealth in human society
What are the three aspects of the economic problem?
Limited/scarce resources
Production
Unlimited wants and needs
What is a PPF?
A production possibility frontier
How does a PPF demonstrate oppurtunity cost?
It compares the production of two products at their maximums.
It allows you to see what is lost somewhere else on the curve
In a curved PPF, why doesn’t the oppurtunity cost remain the same along the curve?
Because the production of two products aren’t identical
And not all inputs are equally suited
When might PPFs shift outwards?
If population increases
Employment rate increases
Technology advances
When might PPFs shift inwards?
Population decrease
Which exonomic concepts can the PPF model illustrate?
Oppurtunity cost
Workforce
Factors of production
What does reallocating scarce resources from ome product to another involve?
An opportunity cost
What allows countries to consume beyond their own PPF?
Trade
If both goods in a PPF were produced more, what would this represent?
An improvement in welfare
A gain in allocative efficiency
