Economics 1 Flashcards
What is economics?
It is the social science that’s studies the choices that individuals, businesses, governments, and other stakeholders in society make as they cope with scarcity.
Why are choices important enough to study?
They are necessary because each of us faces the economic facts of life known as scarcity. Everyone has needs and wants, but the world does not have enough resources to full all these needs and wants. So scarcity takes place. And the study of it is critical to maximize these scarce resources.
What’s the difference between needs and wants?
Wants: These are the human desires for goods and services. Our wants are unlimited.
Needs: These are things we cannot survive without, such as food, water, shelter, and clothing. These are considered to be necessities.
What 2 parts can economics be divided into?
Microeconomics: is the study of choices that individuals and businesses make, the way these choices interact in markets, and the influence of government in those choices.
Macroeconomics: is the study of the effects in the national economy and the global economy of the choices that individuals, businesses, and governments make.
What 3 types of resources are there?
- Natural Resources
- Human Resources
- Man-made Resources
What is the factors of production?
They are the resources that are the building blocks of the economy. The include what people use to produce goods and services.
What are the 4 factors if production? And explain them.
- Land: Land and anything that comes from it. Examples are water, oil, copper, natural gas, coal, and Forrests. They can be renewable and non-renewable.
- Labour: The labour in order to produce goods and services. Examples are, the work done by the waiter who brings you your food, the engineer who designed the bus, an artist’s creation of a painting.
- Capital: Such as machinery, tools, buildings humans use to produce goods and services. Examples are, hammers, forklifts, conveyer belts, computers, and delivery vans.
- Entrepreneurship: A person who combines the other factors of production - land, labour, and Capital - to earn a profit.
What is a problem all individuals and societies are confronted by?
The problem is we have unlimited wants and needs, with limited goods and services to full those needs, which forces us to make choices. Many will be left unsatisfied due to us living in a word of scarcity.
What is opportunity cost?
Is what we call the trade-off between 2 goods. It’s the measuring the cost of the chosen alternative in comparison of the alternatives that we have to sacrifice.
What is the purpose of the production possibilities curve?
The PPF indicates the combinations of any 2 goods or services that are attainable when the community’s resources are fully and efficiently employed.
The PPF is a very useful way if illustrating scarcity, choice, and opportunity cost.
What does the bulging shape of the curve illustrate in a PPF?
It illustrates the increasing opportunity costs: as we move along the curve, mkre if the one good has to be sacrificed to obtain an extra unit of the other good.
What does the PPF mean when reach in macroeconomics?
It illustrates the point at which a countries economy is most efficiently producing it’s various goods and services, and therefore, allocating it’s resources in the best way possible.
What do economists use a PPF for?
They use it to demonstrate that an efficient nation produces what it is most capable of producing and trades with other nations for the rest.
What does a shifting outwards PPF mean?
When the quantity of available resources may increase, or production techniques may improve over time. This indicates economic growth.
What’s the difference between goods and services?
- Goods: are real or concrete items such as property, cars, furniture and clothing.
- Services: are abstract items like medical services, legal services, financial services, the services of an economic lecturer, and the services provided by public servants.
