Chpt 1 Flashcards
What is the economic problem?
the economic problem is a problem of scarcity and a problem of choice or Unlimited wants and scarce resources
What are the 3 basic economic questions ?
What to produce, How to produce and for whom to produce
what does Microeconomics study?
Microeconomics studies how markets and prices work to allocate resources between all the competing industries in the economy
what is Macroeconomics concerned with?
Macroeconomics is concerned with the performance of the whole economy. it focuses on total economic activity in terms of total production, total employment and the overall price level
Types of Resources ?
natural resources, human resources, enterprise and capitol
what is a natural resource?
“gift of nature” any resource that is supplied from the natural environment air,water,minerals,coal,oil.
What is human resource?
The quantity and quality of the labour force. divided into labour ( psychical or mental effort applied in the production of a good or service)
what is enterprise?
( the coordination and management of production by an entrepreneur) represents the ideas and skills which are needed to create new goods and services
what is capitol?
The man made resources which assits human resources in the production of goods and services- psychical capitol not financial Ex machinery ,pens, an computer
What is scarcity?
people scarcity refers to the amount of resources compared to the amount of people that can afford them. EVERYTHING IS SCARCE!
what is a positive statement?
deal with facts that can be tested objectively
What is a normative statement?
Subjective statements which reflect opinions rather than fact, so they can not be tested objectively
What is a market economy?
this is a type of economy where resources are owned privately and all decisions are made by the owners of the resources
what is a Planned economy?
this is a type of economy where resources are owned collectively and decisions are made by planning authority
What is a mixed economy?
this is a type of economy that has elements of both market and planned systems
What is the product market?
Firms produce products and sell to households, Firms supply and households Demand
What is the factor market?
Households sell to firms, household sell labour, capitol and natural resource households supply and firms demand
What is a competitive market?
A competitice market is characterised by a large number of buyers and sellers eg the fruit and veg market
What is a non competitive market?
A non competitive market consists of firms with the market power to settheir own price ( price setters)
What is the Law of demand?
as the price of goods rises, quantity demanded falls or as price falls
What is a marginal cost?
the cost added by producing one additional unit of a product or service.
“this system allowed local authorities to increase expenditure without bearing the full marginal cost”
what is a marginal benefit?
