economics - resource allocation Flashcards
What is a market?
Opportunity for exchange of goods and services between buyers and sellers.
What determines who consumes what in a market?
Price.
What are the two main factors that determine the market for a good/service?
Demand and cost of production.
What is the function of price that allows some consumers to afford goods/services while preventing others?
Rationaling.
What does price signaling indicate about a good/service?
Important information to potential buyers.
How can price act as an incentive for suppliers?
Motivation to provide the good/service.
What is a factor market?
Market for factors of production.
What is a product market?
Market concentrating on the sale of final goods/services.
Give an example of a factor market.
Livestock of sheep or cows.
Give an example of a product market.
Burger from a fast food shop.
What does the primary economic sector involve?
Acquisition of land economic resources (e.g., mining, farming).
What does the secondary economic sector involve?
Manufacturing or assembling products (e.g., manufacturers of aeroplanes, cars).
What does the tertiary economic sector involve?
Provision of services (e.g., banking, insurance, retail).
How do the economic sectors depend on each other?
Each sector relies on the others for resources and services.
What has been the largest sector of the UK economy?
Tertiary sector.
What is a challenge faced by the UK due to its reliance on imports?
Less control over the price of imported goods.
What happens when primary resources start to run out?
The economy may lack other resources to generate wealth.
How can a large secondary sector benefit an economy?
Cheaper availability of products.
What is specialization in an economic context?
Concentrating on production of goods/services that are most efficient.
What are the benefits of specialization?
- Higher output
- Greater variety of products
- Lower prices.
What does division of labor refer to?
Specialization of workforce where separate tasks are undertaken by specific individuals.
What are the advantages of division of labor?
- Increased familiarity with skills
- Increased productivity
- Specific training opportunities.
What are the disadvantages of division of labor?
- Boredom from repetition
- Low motivation
- Potential loss of labor.
- Reduced choice for consumers.
What is the purpose of exchange in an economy?
To fully benefit from advantages of specialization and division of labor.
