ECO TOPIC TEST 1

Question 1

What is microeconomics?

Answer 1

the analysis of the market behaviour of individuals and businesses.

eg a particular supplier (MECCA, supermarket, secondary schools)

Question 2

what is macroeconomics?

Answer 2

The analysis of the overall economy, including markets, businesses, consumers, and governments.

Eg how much is the economy growing overall, how much are people earning.

Question 3

what is positive economics?

Answer 3

free from personal opinion, based on fact, evidence you can collect and see it can be proved and disproved.

Question 4

What is normative economics?

Answer 4

based on personal opinion, based on value judgments, cant be proved or disproved.

Question 5

what is relative economics?

Answer 5

means one thing compared to another

Question 6

what is scarcity?

Answer 6

when people have unlimited wants but resources are limited.

Question 7

what is relative scarcity?

Answer 7

it exits because resource/ factors of production are limited, while peoples needs and wants are unlimited.

Question 8

what are the factors of production?

Answer 8

Land, Labour, Capital

Question 9

what is land?

Answer 9

land is the rescources that occur in nature, natural rescource.

eg: minerals, forests, water, oceans, rivers, crops, land

Question 10

what is labour?

Answer 10

the physical and mental effort by humans in the production process.

Question 11

what is capital?

Answer 11

resources made by combining labour and land that will be used in the production process.

eg: ovens, soft serve machines, machines in factories, tables, chairs,

Question 12

what is opportunity cost?

Answer 12

the value of the next alternative that is forgone whenever a choice is made.

Question 13

what is the oppurtunity cost for businesses

Answer 13

they have limited land, labour and capital available - so they got to chose what they do and also what they wont do.

Question 14

uses for opportunity costs for governments and nations

Answer 14

aged pension, education, roads, defence police, army, health, vaccines, aged care, disablilty care, unemployment.

Question 15

what does the production possibility frontier show in production.

Answer 15

it shows the level of outputs, the level of goods and services that could be produced by businesses.

Question 16

what does the production possibility frontier show in possibility?

Answer 16

it shows all the possible outcomes of the two goods, the things that are on the x and y axis with the given amount of resources that the business have.

Question 17

what does the curve/frontier show on the production possibility frontier.

Answer 17

it is a line that is convex, bulges out from the axis.

Question 18

what is efficiency?

Answer 18

where every resource available is allocated optimally- reallocating resources can only make one person better off by making another person worse off.

Question 19

what does the PPF and opportunity cost show?

Answer 19

it shows a business or an economy what it has to give up in order to make more something.

Question 20

what is a trade off?

Answer 20

they occur whenever individuals, business or governments make choices between different ways that scarce rescouce might be used.

Question 21

what are the three economic questions?

Answer 21

for whom to produce, what and how much to produce, how to produce

Question 22

whats the economic systems?

Answer 22

traditional, market, planned, mixed

Question 23

what is a traditional economic system?

Answer 23

ased on established culture and rituals.
focuses om
- family/tribe
- hinter/gathers ir nomadic society
- based on trade no curnecy
- production focuses on meeting short term needs.

Question 24

what is a market economic system?

Answer 24

a pure market economy relies soley on the operation of markets were buyers sellers and a system of price awnser the 3 economic questions.

• private properly
• no taxes
• freedom of choice
• lots of competition
• no government intervention.

Question 25

what is a planned economic system?

Answer 25

purely planned economics rely entirely on powerful non-democratic, doctoral central governments to make key economic decisions about what, how and for whom to produce. -Government has a plan for the whole economy -Government allocates resources in order to achieve the plan -Government passes laws to support the plan -Government owns all businesses, makes all decisions about solving the 3 economic questions

Question 26

what is a mixed economy system?

Answer 26

Almost all of the world’s economies are mixed - Most/many decisions made by markets and the impact of the relative prices determined by those markets -The government intervenes in some markets, especially where the government feels that the markets have failed to effectively allocate resources -There is private property and private businesses – but also government property and government businesses

Question 27

what are the three secotor circular flow models?

Answer 27

households, businesses and governments.

Question 28

what is a households circular flow model?

Answer 28

Consumers – those who use goods and services. households consist of one of more consumers – depending on how many people live thereSome people own businesses, own the resources used by businesses Households sells resources (land, labour, capital) to the Business sector Households and Government spend that income on goods and services

Question 29

what is a business circular flow model?

Answer 29

Suplliers/businesses - Produce goods and services eg. Tradie ,Shop, Influencer Business pays incomes to those Households 2a – Households pay taxes to Government Business provides goods and services to Households and Government

Question 30

what is a government circular flow model?

Answer 30

The government or public sector includes the activities and decisions of federal, state and local authorities. Collects taxes and other revenue from households earning income, and then uses this money to help pay for government spending on the provision of goods and services for the community (e.g. public roads, health, education, transport and housing).

Question 31

what is the first circular flow model?

Answer 31

Households make resources (land, labour, capital) available to Business -We assume that these resources are all (initially) controlled by households -Households own all of the land – they can sell or rent their land to business -Households are where the workers are – they can work for business Households have the wealth and can decide what to do with it – they can invest in business, either through ownership or loans, so that business can purchase capital

Question 32

what is the second circular flow model?

Answer 32

Business pays incomes to those Households Households do not generally provide their resources to Business without getting anything back in return If a Household provides a Business with-In return they expect Land- Rent or purchase price of that land Labour- Wages/salary Capital (money)-Interest (if it was a loan) or dividends/a share of the businesses profits

Question 33

what is the second circular flow model?

Answer 33

Households and governments spend their income on goods and services When Households receive money from Businesses, Households will pay taxes to the government -They will then spend most of the rest of that money -At the very least, they will need to spend money on their needs -But normally, households will also spend a chunk of that money on wants as well -Households might also save some – we not focused on that yet They can spend on goods, services or combinations of the two

Question 34

what is the 4th circular flow model?

Answer 34

Business provides goods and services to those households and Government So now Households and Governments have spent their money – they have paid forgoods and services from the Business sector to meet their wants and needs So the Business sector has to provide those goods and services to Households and Governments -They gotta deliver the goods -Serve up the donuts -Deliver the Ghanda hoodie -Apply the spray tan -Build the road or bridge; the Metro tunnel

Question 35

The main phases of the economic cycle

Answer 35

Boom -expansion -Inflation (price rises) is high -Unemployment is low -Economic/GDP growth is high Recession/contraction -inflation (price rises) is low -Unemployment is high -Economic/GDP growth is low

Question 36

The purpose of economic activity

Answer 36

the main purpose of economic activity is to help satisfy society’s many needs and wants -We know that needs and wants are different things -We also know that wants are unlimited – we want it all

Question 37

what is living standerds?

Answer 37

Living standards refer to a society’s general level of well-being

Question 38

what are the two different types of living standards?

Answer 38

Non- material and material

Question 39

what are material living standards?

Answer 39

measured by individuals access to goods and services – how much stuff can you purchase? Generally, the higher your income, the more stuff you can purchase and the higher your material living standard

Question 40

what are non-material living standards?

Answer 40

measured by the impact that non-material factors have on an individual’s quality of life. Things like leisure time, crime rates, pollution levels, life expectancy, physical and mental health all impacton people’s well-being

Question 41

what is the aim of economic activity?

Answer 41

maximise living standards.

Question 42

what can you say about how economic activity impacts on living standards

Answer 42

Higher levels of economic activity lead to higher MLS and generally higher NMLS, though some drivers of NMLS will decline Lower levels of economic activity lead to lower MLS and generally lower NMLS, though some drivers of NMLS will improve