Chapter 1 -6 Flashcards
Define scarcity
A situation where there is not enough to satisfy everyone’s wants and needs
Define scrace
Insufficient to meet demand
Explain economic goods (3)
Requires the use of scarce resources
can be sold to make profit (monetary value)
Making/consuming them involves opportunity cost
Explain free goods (3)
does not use scarce goods (no O.C)
Adds no monetary value to the country’s GDP
infinetely abundant
What is the economic problem
unlimited wants exceeding finite resources
What are the 4 factors of productions (4)
land
labour
capital
enterprise/entrepreneurship
Define land (FoP)
gifts of nature available for production
Define labour (FoP)
human effort used in producing goods and services
Define capital (FoP)
human made goods used in production
Define enterprise (FoP) (2)
willingness and ability to bear uncertain risks and to make decisions in a business
Brings together the other 3 factors of production
Define consumer goods
goods and services purchased by households for their own satisfaction
What are the two types of mobility of the factors of production (2)
Occupational
geographical
Define occupationally mobile
Can be used for different purposes
Define geographically mobile
capable of moving from one location to another
Define productivity
term used to define the output per factor of production in a given amount of time
What is investment
spending by firms on capital
What is depreciation
Capital getting worn out and broken
What is gross investment
new capital
what is net investment
total increase or decrease in capital stock
Equation for net investment
Gross investment - depreciation = net investment
Define negative net investment
quantity of capital falling overtime
Define opportunity cost
The value of the next best alternative foregone when a decision is made
Define Production possbility curve
A simple model showing the combinations of output of two goods which can be produced by the resources (FoPs) available in an economy
Define economic agents
decision makers in an economy (those who undertake economic activity)
Who are the 3 economic agents (3)
Governments
households/individuals
producers
What are the 3 types of households/individuals (economic agents) (3)
consumers
workers
savers
Define stakeholders
any individual/group/organisation that is affected by an economic decision
Define economic systems
the institutions, orgnaisations and mechanisms that influence economic behaviour and determine how resources are allocated
What are the 3 key allocation decisions
what to produce?
How to produce it?
Who is to receive the products produced?
Define directives
state instructions given to state owned enterprises
causes of geographical immobility of labour (3)
Differences in the price and availailuty of housing in different areas and countries
family ties
linguistic barriers
How is the quantity of labour determined? (4)
the size + age structure of population
retirement age
school leaving age
attitude to working women
number of hours which people work is influenced by: (5)
the length of the average working day
whether they work full or part-time
the duration of overtime
the length of holidays taken by workers
the amount of time lost through sickness and illness
