Chapter 2: Economic Cycle Flashcards
What is the basic economic problem
There are unlimited needs and wants but limited means
Factors of production and their renumeration
Land-rent
Entrepreneurship-profit
Labour-wages
Capital-interest
What is a need
What are the 4 basic ones
Something necessary in order to stay alive Food Shelter Water Clothing
What is a want
Something you’d like to have but is not essential for survival
Free vs economic goods
Needs-wants Free-prepared to pay Unlimited-limited offer (if price attached) Not controlled-someone owns it Not indication of wealth- is
Economic cycle definition
The plan for people to acquire money/the circular flow of money
What are the participants in the economic cycle
Households
Businesses
Government
International sector
Describe household
Own all FOP’s have needs and wants
Describe businesses (what do they do/make)
Make goods and services Select goods Speciality goods Convenience goods Services
What are convenience goods
Items bought often without too much thought. Eg magazines groceries petrol
Price isn’t considered unless it falls out of expectations
What are shopping/select goods
Purchased less frequently after customer has made comparisons.
Selectively distributed require personal marketing. Eg airline tickets, electronics, phones
What are Speciality goods
Unique characteristics
Fancy,professional equipment
High fashion
What are unsought goods
Wouldn’t normally think of buying, purchased due to arise/fear of dangers and lack of desire
Eg. Funeral services, reference books fire extinguishers
What is a service
Work preformed for remuneration
Describe government
Charges tax and creates infrastructure
