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Economics > Basic Economics > Flashcards

Basic Economics Flashcards

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1
Q

What is Macro-Economics?

A

deals with economics from a society’s point of view

it looks over the whole economy - total production, unemployment, inflation rate, business cycle

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2
Q

What is Micro-Economics?

A

deal with economics from a small or individual perspective

tries to understand how producers and consumers make their decisions

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3
Q

What is economics?

A

The study of how scare resources are turned into goods and services and distributed among society

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4
Q

Characteristics of Non-Competitive Market?

A

Small number of firms
Firms are price setters - they have market power
Product differentiation - products are different in consumer eyes
Entry to market is restricted

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5
Q

Three Questions for role of market?

A

What good and service to produce and how many?
How will good and service be produced?
Whom will the good and service be produced for?

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6
Q

Characteristics of Competitive Market?

A

A large amount of buyers and sellers
Firms are price takers- accept whatever price market sets
Sell similar(homogeneous) goods
Easy entry or exit into market

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7
Q

What is a Factor Market?

A

Factor Market deals with buying and selling factor of production such as labour

Households are supply side of market and firms are demand side of market

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8
Q

What is a Product Market?

A

Goods and Services are brought and sold

Consumers are the demand side of the market

Businesses and firms are the supply side of the market

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9
Q

What is Opportunity cost?

A

Best value foregone by not choosing an alternative course of action

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10
Q

What is Scarcity?

A

that resources are limited, but our wants and needs are unlimited

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11
Q

What is Capital Resource

A

man made resources which assit humans with the prodcution of goods and services

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12
Q

What is Natural Resources?

A

Resources from the earth

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13
Q

What is Enterprise?

A
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14
Q

What is PPF(Production Possibility Frontier)?

A

It is a visual representation of the opportunity cost of two items, allows us to calculate opportunity cost

When a resource is used to produce a certain product, sacrifices have to be made, as those resources can no longer be used for other products they could have produced

Maximum potential production of the economy

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15
Q

What does the PPF assume?

A

Fixed and finite level of resources
Technology is fixed
The economy produces two things

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16
Q

What can push the PPF outwards?

A

Education and technology

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17
Q

Why is the PPF curved?

A

Because of increasing opportunity cost

Law of increasing costs - cost increases as resources become harder to convert to the other production industry

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18
Q

What is economic growth?

A

Economic growth refers to an increase in capacity of an economy to produce goods and services.

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19
Q

How can Economic growth occur?

A

EG can occur as a result of an increase in the quantity of resources or the improvement in quality of resources

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20
Q

What are capital goods

A

goods that are used in producing other goods, rather than being bought by consumers.

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21
Q

What are consumer goods

A

goods bought and used by consumers, rather than by manufacturers for producing other goods.

22
Q

What are normal goods?

A

Have a direct relationship between income and demand.

23
Q

What inferior goods?

A

Have an inverse relationship between income and demand. Example – Home brand food or generic clothing

24
Q

What are complementary goods?

A

Are goods used or bought with other goods.

25
Q

What are substitute goods?

A

Are brought instead of another good

26
Q

What two types of human resources?

A

Labour and Enterprise

26
Q

State the law of demand?

A

When the price of product increases,the quantity demanded will decrease. vice versa

26
Q

State the law of supply?

A

Law of demand states that a higher price for a good and service will lead to producers to supply more of that good or service to the market

26
Q

What is enterprise?

A

Coordination and management of production by an entrepreneur by combing natural, labour and capital resources

26
Q

Example of natural resource?

A

wind,oil

26
Q

Example of enterprise?

A

Elon Musk and Kanye West

26
Q

Example of complementary good?

A

milk and cookies

26
Q

Example of substitute good?

A

Margarine and butter
Coke and pepsi

27
Q

Example of inferior good?

A

Home brand foods

28
Q

Example of normal good?

A

Chocolate

29
Q

Non-price factors effecting supply?

A

Expected Future Price
Number of suppliers(sellers
Technology
Cost of Production

30
Q

Non-price factors effecting demand?

A

Population(number of consumers)
Income
Expected future prices
Tastes and Preferences

31
Q

How to clear surplus?

A

Producers to reduce price to entice consumers to buy their market

32
Q

How to clear shortage?

A

Producers increase a price to make a profit

33
Q

What is labour?

A

Physical and mental effort applied in the production of goods and services

34
Q

What is a Production Possibility Diagram used for?

A

To illustrate the many output choices available for an economy that produces only two things.

35
Q

What does supply curve represent

A

A graph of the relationship between the price of a good and the quantity supplied

36
Q

Two reasons why government intervenes in the market

A

“Promote efficiency and equality”

36
Q

Demand Curve

A

A graph of the relationship between the price of a good and the quantity demanded

36
Q

Normative Statements

A

Making a claim about how the world should be (“prescriptive statement or how to improve the economy or a)

37
Q

Positive Statements

A

Making a claim about how the world should be (“prescriptive statement or how to improve the economy or a)

38
Q

Surplus

A

A situation in which the quantity supplied is greater than the quantity demanded

39
Q

Rational consumer or sensible consumer aims to

A

secure the highest level of satisfaction that their income allow

40
Q

What is rational-self interest

A

Economic decisions are based on a person following a logical process in order to compare the costs and benefits of decisions (benefit exceeds the cost)

41
Q
A

Economics (14 decks)

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