Basics

Question 1

Enterprise

Answer 1

The ability to take risks and run a business venture.
Individual benefits from profit.

Question 2

Customer

Answer 2

An individual consumer organisation that purchases goods or services from a business.

Question 3

Consumer

Answer 3

An individual who is willing and able to purchase goods and services for personal use

Question 4

Consumer good

Answer 4

The physical and tangible goods sold to consumers that are not intended for resale.

These include durable consumer goods, such as cars and washing machines, and non durable consumer goods, such as food, drinks and sweets, that can be used only once.

Question 5

Consumer services

Answer 5

The non-tangible products sold to consumers that are not intended fir resale.
e.g. hotel accommodation, insurance services, train journeys

Question 6

Factors of production

Answer 6

The resources needed by business to produce goods or services.

Question 7

Name the factors of production and their rewards

Answer 7

Land - Rent
Labour - Wages
Capital - Interest
Enterprise - Profit

Question 8

Capital goods

Answer 8

the physical goods used by industry to aid in the production of other goods and services, such as machines and commercial vehicles.

Question 9

Enterprise

Answer 9

the action of showing initiative to take the risk to set up a business.

Question 10

Land

Answer 10

refers to all the natural resources used in the production of goods and services

e.g. earth, lakes, rivers, forests

Question 11

Labour

Answer 11

is the mental / physical effort people provide used in the production of goods and services

Question 12

Capital

Answer 12

a human made good to produce other goods or services

Question 13

Capital

Answer 13

a human made good to produce other goods or services

Question 14

Rent

Answer 14

Owners of land require the payment of rent to supply these resources to people / organizations.

Question 15

Interest

Answer 15

People and organizations that invest capital in firm receive interest.

Question 16

Wages

Answer 16

People will supply their labour to firms in return for wages (payments)

Question 17

Profit

Answer 17

A surplus of revenue from the sale of outputs over the cost of their production

Question 18

Finite

Answer 18

Limited in supply

Question 19

Economic problem

Answer 19

Scarcity of resources relative to unlimited human wants

Question 20

Free goods

Answer 20

Are without limit.

Not possible to make a profit from free goods due to their abundance.

They can be consumed by many people at the same time, and without reducing the amount available to others.
(sunlight, air)

Question 21

Economic goods

Answer 21

Are limited in supply.

People are therefore willing to pay to obtain these goods.

Due to their value, producers will attempt to supply them in order it make a profit.

e.g. oil, corn, gold, watches, bicycles

Question 22

Consumption

Answer 22

The using up of goods and services to satisfy human wants and needs

Question 23

Inputs

Answer 23

Resources, factors of production

Question 24

Outputs

Answer 24

Products, goods and services

Question 25

Factor mobility

Answer 25

The ability or ease with which factors of production can be moved or reallocated between different productive uses without incurring significant costs or a loss of output.

Question 26

Occupational mobility

Answer 26

Ability to move factors of production between different productive tasks

(Capable of changing use)

Question 27

Geographical mobility

Answer 27

Ability to move different factors of production to different locations

(Capable of moving from one location to another)

Question 28

Factors of production may be moved

Answer 28

• within a firm
• between firms
• between industries
• between different countries

Question 29

Opportunity cost

Answer 29

The benefit forgone by giving up the next best alternative use of scarce resources

Choosing one use of resources always means going without another

Question 30

Production possibility curve

Answer 30

PPC

A PPC of a firm shows the maximum possible output combinations of two goods or services that it can produce with a given set of inputs consisting of factors of production.

Question 31

Inefficiency (PPC)

Answer 31

Any point inside the curve.

Producing less than it can potentially do.

Question 32

Unattainable (PPC)

Answer 32

Any point outside the curve.

Beyond the scope of the economy‘s existing resources.

Question 33

Microeconomics

Answer 33

The study of market structure and the behaviour of individual producers and consumers

(individual markets)

Question 34

Macroeconomics

Answer 34

The study of how a national economy works

Question 35

3 questions every economy has to solve

Answer 35

• what to produce?
• who to produce it for?
• how to produce?

Question 36

Economic system

Answer 36

How an economy allocates resources to competing productive activities and assigns the outputs or products of these activities to different consumers.,

Question 37

Market economic system

Answer 37

An economic system in which decisions about how resources are used, what goods and services they produce and how they are allocated, are taken by private sector firms and consumers.

Question 38

Planned economic system

Answer 38

An economic system in which the government determines what goods and services to produce, their prices and how they are allocated.

Question 39

Mixed economic systems

Answer 39

A mixed economic system combines government planning and ownership of resources with the use of the free market economic system to determine the allocation of resources in the economy, that is what is produced, how and for whom.

Question 40

Market

Answer 40

Any set of arrangements that allows producers and consumers to exchange goods and services.

Question 41

Needs

Answer 41

Essential to human life e.g. shelter, food, clothing

Question 42

Wants

Answer 42

Non-essential desires e.g. better housing, a yacht etc.

Question 43

Due to scarcity, choices have to be made by…

Answer 43

Producers
Consumers
Workers
Governments
..about the most efficient use of these resources.

Question 44

Resources

Answer 44

are the inputs required fir the production of goods and services

Question 45

Economy

Answer 45

An area where people and firms produce, trade and consume goods and services.

(within town, country, globe)