concepts Flashcards
Allocative efficiency
is when resources are distributed to maximize societal demand where goods and services are produced according to the consumer
Productive efficiency
Productive efficiency occurs when an economy or business produces goods and services at the lowest possible cost while using all available resources optimally
The frontier (PPC Model)
The frontier is the wall where resources are scarce and production must stop. The frontier is also where the production is productively efficient.
Scarcity
Scarcity is the fundamental economic problem of having limited resources to satisfy unlimited human wants and needs.
Opportunity Cost
What we give up to gain something else, measured in the second next best option
Economic Growth
The increase in real output over time for an economy
Investment
Spending by governments or firms on capital goods/resources to aid future production
Capitalist
The economic system where resources are owned by private firms
Income
Income is the money or value a person, business, or government receives in exchange for -
L, N, K, E
How to make income
L (Labour) - Wages
N (Land) - Rent
K (Capital) - Interest
E (Enterprise) - Profit
Sustainability
the ability to meet present economic needs without compromising the ability of future generations to meet their own needs.
Market
Market: refers to a place in which the buyers and sellers interact and exchange goods and services at agreed prices.
Equilibrium
Equilibrium is the state where economic forces—such as supply and demand—are balanced, meaning there is no tendency for change unless external factors intervene. It represents stability in a market or system.
Supply
Supply: refers to the total goods and services that the seller is willing to and ready to sell.
Demand
Demand: refers to the total goods and services that the buyer is willing to and is able to buy.
