Definition

Question 1

Economics

Answer 1

Is a social science which means that it is concerned with the study of human behaviour.

It is the allocation of scarce resources to provide for unlimited human wants.

Question 2

Factors of production

Answer 2

Inputs to the production process.

C apital
E nterprise
L and
L abour

Question 3

Basic economic problem

Answer 3

Resources are scarce but human wants are unlimited

Question 4

Positive statements

Answer 4

Deals with objective and scientific explanations of the economy.

They are value free (1) and can be proved or disproved (1)

Question 5

Normative statements

Answer 5

Is the study of what ought to be.(1)

It contains a value judgement (1) and cannot be proved or disproved (1)

Question 6

PPF (Production Possibility Frontier)

Answer 6

Shows the maximum output combinations an economy can achieve when all resources are full and efficiently employed.

Question 7

Capital goods

Answer 7

Means the investment in goods that are used to produce other goods in the future

Question 8

Consumer goods

Answer 8

Directly provide satisfaction or utility to consumers

Question 9

Renewable resource

Answer 9

Is one whose stock levels can be replenished naturally over a period of time.

These include: solar energy, wing power, tidal power, fish, timber and soil

However, it’s stock level can decline if it is being consumed at a faster rate than the environment can replenish them

Question 10

Non-renewable resources

Answer 10

Is one whose stock level decreases over a period of time.

These resources include force of fuels such as coal, oil and gas. They also include commodities such as steel, copper aluminium.

It is possible to reduce The rate of decline of nonrenewable resources through recycling and the development of substitutes.

Question 11

Increasing opportunity cost

Answer 11

Bows to the origin (1) 
Diminishing returns (1)

• Factor immobility exists

Question 12

Geographical mobility

Answer 12

The ease of people moving from one area to another to find work.

Question 13

Labour

Answer 13

Is the human input into the production process.

Question 14

Land

Answer 14

Anything provided by nature.

Question 15

Enterprise

Answer 15

Is the quality which involves someone’s willingness and initiative to take risks in order to create and sell products.

Question 16

Occupational immobility

Answer 16

Occurs when there are barriers to the mobility of factors of production between different sectors of the economy leading to these factors remain unemployed, or being used in ways that are not efficient.

Question 17

Division of labour

- Adam Smith

Answer 17

Is a particular type of specialisation with the production of a good is broken up into many separate tasks, each of the phone by one person.

Question 18

Economic systems

Answer 18

This is a complex network of individuals, groups and institutions which allocate resources.

Question 19

Economy

Answer 19

The function of an economy is to solve the basic economic problem.

Question 20

The market mechanism

Answer 20

Why is and sellers agree on the price of the product being sold.

Question 21

Planning

Answer 21

Allocate resources through administrative decisions.

Question 22

Free market economy

Answer 22

And economy where all resources are allocated by the price mechanism. (1)

There is no government intervention.(1)

Question 23

Planned economy

Answer 23

All resources are allocated by the government. (1)

There is no price mechanism.(1)

Question 24

Demand

Answer 24

Is the quantity of a good or service that consumers are willing to buy at a given price over a given time period.

Question 25

Supply

Answer 25

Is the quantity of a good or service that firms are willing to supply at a given price of a given time period.

Question 26

Equilibrium

Answer 26

Occurs in the marketplace one quantity demanded exactly equal quantity supplied. (1)

This is the price at which there is no tendency to change.