Business + the economy

Question 1

Economics

Answer 1

The study of a group or individual about the decisions they make about limited resources to satisfy our unlimited needs + wants.

Question 2

Basic economic problem

Answer 2

Relative scarcity

Question 3

Relative scarcity

Answer 3

• The economic problem
• Resources are limited but wants are unliited.

Question 4

Opportunity cost

Answer 4

• The value of the item foregone/lost opportunity.
• Shows that an alternative want must go unsatisfied when a limited resources is used for something else.

Question 5

Types of resources

Answer 5

• Land
• Labour
• Capital
• Enterprise

Question 6

Land

Answer 6

• Natural resources/’gifts of nature’.
• eg. crops.

Question 7

Labour

Answer 7

• The people power (human skills + effort), and can be both mental and physical effort.
• eg. builders (physical), engineers (mental).

Question 8

Capital

Answer 8

• Manmade things used to help in the making of goods + services.
• eg. ladders, trucks.

Question 9

Enterprise

Answer 9

• The qualities someone possesses to help them perceive market opportunities and coordinate production processes.
• eg. entrepreneur.

Question 10

Needs

Answer 10

• Things necessary for survival.
• Eg. food, water, shelter, clothing.

Question 11

Wants

Answer 11

• Things not necessary for survival but we desire to make our lives better.
• Eg. pool, bigger house, newest smartphone, car.

Question 12

Reason for choice

Answer 12

Relative scarcity.

Question 13

Markets

Answer 13

An area where people in the economy produce, purchase, and consume, goods + services.

Question 14

3 basic economic questions

Answer 14

1. What to produce?
2. How to produce?
3. For whom to produce?

Question 15

1. What to produce?

Answer 15

Consumer sovereignty which is that the consumer is in charge when it comes to where resources should be allocated.

Question 16

2. How to produce?

Answer 16

Using the lowest cost method available = maximise profit. Also cheaper to replace workers with machines.

Question 17

3. For whom to produce?

Answer 17

Most goods + services go to those who can afford them unless it is a need.

Question 18

The price mechanism

Answer 18

Where producer supply + consumer demand interact to set prices for goods and services.

Question 19

Law of demand

Answer 19

As the price decreases, quantity demanded increases + vice versa.

Question 20

Demand factors

Answer 20

• Price
• Price of a substitute product
• Price of a complementary product.
• Income levels.
• Consumer taste + preference.

Question 21

Demand curve

Answer 21

Up to left.

Question 22

Law of supply

Answer 22

As the price increases, amount producers are willing to supply increases + vice versa.

Question 23

Supply factors

Answer 23

• Motivation
• Price of factors of production
• Price of related goods
• Technology
• Weather/natural disasters

Question 24

Supply curve

Answer 24

Up to the right.

Question 25

Equilibrium price

Answer 25

The price at which the level of consumer demand is equal to the amount producers are willing to supply.