Economic Cycle Flashcards
What is the basic economic problem?
Everyone has unlimited needs and wants, but limited resources to satisfy these needs - e.g. money
Name the factors of production and the reward for each
Land - Rent
Capital - Interest
Labour - Wages
Entrepreneurship - Profit
Define need
Something you have to have in order to survive
Define want
Something you would like to have but it is not necessary for your survival
What are the 4 basic needs?
Food
Water
Clothing
Shelter
Define free goods
Satisfy needs
Don’t need to be paid for
Generally available in unlimited quantities
No one can possess or control it
It is not regarded as an indication of wealth
Define economic goods
Satisfying needs and wants
People are prepared to pay for them
Limited offer (it has a price attached to it)
It belongs to some who is prepared to sell it to a buyer who will then own it
If people own/possess these, they are regarded as wealthy
What are the 4 participants in the economic cycle?
Households
Businesses
Government
International sector
Describe the economic cycle.(6 parts)
Households - Receives goods and services from the goods and services market, which is an expense to the households. Provides factors of production to the market for the factors of production, which in return the households receive an income.
Market for the factors of production - Receives factors of production from households, which is an expense. Provides factors of production to the businesses, in return receives income.
Businesses - Receive factors of production from the market for the factors of production, which is an expense for the business. Provides goods and services to the market for goods and services, in return receives income.
Market for goods and services - Receives goods and services from businesses, which is an expense. Provides households with goods and services, receives income in return.
Government - Collects taxes and service delivery between Market for factors of production and households
Foreign sector - Imports and exports between businesses and the market for the factors of production
Households own ____ the ______ of _________ and have ______ and _______.
Households own ALL the FACTORS of PRODUCTION and have NEEDS and WANTS.
Name 4 goods/services businesses make.
Services
Select goods
Specialty goods
Convenience goods
Define convenience goods
Items customers buy often and easily without putting much thought into them.
Define select goods
Usually purchased less frequently, only after the customer has compared price, attributes, quality and style in more than one store at a time. Require personal selling and advertising; located at fewer outlets; selectively distributed
Define specialty goods
Have unique characteristics and brand identifications for which a significant group of buyers is willing to make a special purchasing effort.
Define unsought goods
Goods that the consumer doesn’t know about or doesn’t normally think of buying, and the purchase of which arises due to danger or the fear of danger and lack of desire
