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Econ > Chapters 1 - 6 chug > Flashcards

Chapters 1 - 6 chug Flashcards

1
Q

The economic problem

A

Unlimited wants exceeding finite resources

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2
Q

Scarcity

A

When there is not enough to satisfy everyone

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3
Q

Economic good

A

Uses resources to produce and are limited in supply

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4
Q

Free goods

A

Takes no resources to produce

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5
Q

Factors of production

A

Land, Labour, Capital, Enterprise

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6
Q

Land

A

Gifts of nature used in the production process

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7
Q

Labour

A

Human effort used in the production process

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8
Q

Capital

A

Man made goods used in the production process

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9
Q

Enterprise

A

The risk-bearing and decision making that combines other factors of production to produce a product

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10
Q

Mobility of land

A

Occupationally mobile, geographically immobile.

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11
Q

Mobility of labour

A

Varies, such as housing, family ties, education for children, lack of information, mobility restrictions (visa)

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12
Q

Mobility of capital

A

Varies on type of capital

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13
Q

Mobility of enterprise

A

Most mobile, entrepreneurs have the skills to apply skills in every industry and can move individually.

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14
Q

Quantity and quality of land

A

Quantity barely changes, quality can be affected by things like fertilizer and pollution

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15
Q

Quantity and quality of labour

A

Quantity: Population size, Age groups, School leave, Retirement, Women’s rights
(Hours worked by: Sick days, work hours, full or part time, holidays)
Quality: Education, training, experience, healthcare

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16
Q

Quantity and quality of capital

A

Quantity: Investment, gross investment - depreciation = net investment (if there is loss it is a neg ative net investment)
Quality: Technological advancements

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17
Q

Quantity and quality of enterprise

A

Quantity: no. entrepreneurs, education, taxes on firms, immigration
Quality: education, training, healthcare, experience

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18
Q

Rewards of FoP’s

A

Land: rent
Labour: wage
Capital: interest
Enterprise: profits

19
Q

What is opportunity cost

A

Best alternative forgone

20
Q

Opp. cost for consumers

A

Between goods/services

21
Q

Opp. cost for workers

A

Between jobs

22
Q

Opp. cost for producers

A

Between what to produce

23
Q

Opp. cost for governments

A

Between expenditure of tax revenue on infrastructure

24
Q

Opp. cost for goods

A

Economic goods have to decide the resources allocated for production while free goods don’t. Free goods don’t have an opportunity cost

25
Q

PPC curve

A

Graph representing the combinations of products which can be produced with a limited amount of resources

26
Q

PPC Production points

A

On the line: Using all resources to make a maximum amount of goods
Under the line: Not using all the resources in hand and produce some goods
Over the line: Impossible to produce, not enough resources to produce

27
Q

PPC shapes

A

Curved: Allocating resources differently cause a difference in proportion produced (Different resources)
Sloped: Resources are equally suited to produce both types of products (Similar resources)

28
Q

Movement in PPC

A

Using the same number of resources to produce a different combination of goods

29
Q

Shifts in the PPC curve

A

Increase or decrease in the number of resources which can produce goods

30
Q

Microeconomics

A

Study of the behavior of firms and households.

31
Q

Macroeconomics

A

Study of the whole economy

32
Q

Decision makers in economic systems

A

Economic agents: Households (Consumers, savers, workers), Producers, Governments

33
Q

3 allocation decisions

A

Who is the consumer?
What to produce?
How to produce?

34
Q

Planned economic system

A

Where the government makes the decisions of allocation. Will provide necessities and important products to it’s citizens.

35
Q

Market economic system

A

Where consumers choose what to produce and firms individually choose how to produce. No government intervention. Firms have competition and seek to achieve the lowest cost for the highest quality.

36
Q

Price mechanism

A

How price is determined by the forces of supply and demand. Resources are allocated to popular products which consumers want through demand to what they are prepared to pay.

37
Q

Economic systems

A

The institutions, organisations and mechanisms that influence economic behavior and determines how resources are allocated

38
Q

Directives

A

State instructions to state-owned enterprises

39
Q

Gross investment

A

Total spending on capital goods

40
Q

Depreciation

A

Value of capital goods worn out or obsolete

41
Q

Net investment

A

Gross investment - Depreciation

42
Q

Negative net investment

A

Reduction in capital caused by worn out, unreplaced capital goods

43
Q

Labour force

A

Those willing or who are working

44
Q

Entrepreneur

A

Bears risks and makes key economic decisions in a business

Econ (9 decks)

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