Economics 1 Flashcards
the economic problem
people have infinite wants whilst resources are scarce.
planned economy
state decides what, how to produce.
mixed economy
combination / balance of a government controlled economy and free economy.
free economy
market without government regulation.
planned economy eg?
north korea, china
mixed economy eg?
UK
free economy eg?
switzerland, ireland
scarcity means that people must
make a choice (rational decisions change depending on the individual).
need
a necessity and something that is someone must have to live.
want
not essential, something someone would like to have.
opportunity cost
next best alternative foregone
what are the factors of production?
CELL
c - consumers
e - enterprises
l - land
l - labour
primary sector with eg
extracting raw materials
eg. farming, mining, fishing
secondary sector with eg
processing or refining materials
eg.manufacturing
tertiary sector with eg
providing services to public or private sector
eg.education,health
why has primary jobs decreased?
because of the industrial revolution people moved to secondary jobs
why has secondary jobs decreased?
machines can now replace workers, this benefits the company as they wouldn’t have to pay wages to workers.
markets?
any situation when buyers and sellers exchange goods and services.
factor market
markets for factors of production (CELL).
product market
final goods or services themselves.
specialisation
when a group focuses on producing certain products.
advantages for individuals
- high productivity
- focus on one product
- getting more skilled at their own job
advantages for firms
- more quality products
- more efficient (cost per unit)
disadvantages for individuals
- limited to one set of skills
- boredom
disadvantages for firms
- risk of work not being complete
- more competition
ppf curve shows?
combination of 2 goods that can be produced using the available rescources and highlights the concept of opportunity cost.
points inside the curve
inefficient
points outside the curve
not possible
points on the curve
effiecient
economic growth
the quantity and quality of the factors of production
improvement in quality
- better use of rescources
- specialisation
- investment in capital
- more skilled workers
capital goods
no immediate benefit, will allow more consumer goods to be produced in the future
consumer goods
will be ‘used up’ on consumption, benefit is derrived immediately
