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Y1 OF L&E > Economics Stage 1 > Flashcards

Economics Stage 1 Flashcards

1
Q

What are Economic Actors?

A

Firms, Consumers and Governments in a Market.

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2
Q

What is Economics?

A

Economics represents a social science which focuses on activities such as production, consumption and distribution.

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3
Q

What are “Firms” in Economics?

A

Firms are producers of good and services in a Market.

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4
Q

What are “Consumers” in Economics?

A

Consumers are regulators/purchasers of goods and services in a Market.

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5
Q

What are “Governments” in Economics?

A

Governments are regulators of economic activity.

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6
Q

What is the term “Scarcity” in Economics?

A

Scarcity is the concept of unlimited wants to a limited means.

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7
Q

What is the term “Choice” in Economics?

A

Choice is the decision to select an option given the presence of alternatives.

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8
Q

What is the term “Order of Preference” in Economics?

A

Order of Preference is the ranking of options based off of desirability.

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9
Q

What is the term “Opportunity Cost” in Economics?

A

Opportunity Cost is the benefit that could have been derived from selecting the next best alternative.

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10
Q

What is the term “Marginalism” in Economics?

A

Marginalism is the belief that choices are made in incremental or quantifiable steps.

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11
Q

What is Product Differentiation?

A
  • Firms in a monopolistic competition market have the ability to alter their
    products to make them different to the products offered by their competitors.
  • A common approach is through branding.
  • Brands can be purely symbolic (e.g. fashion labels) or attempt to communicate a non-visible feature (e.g. organic or fair trade).
  • This product differentiation allows firms to compete in three different ways:

▪ Quality Competition– firms may develop high quality products (e.g. more durable, reliable, and with better customer support)

▪ Price Competition– a firm producing a lower quality good may sell that product at a lower price than the market price.

▪ Marketing Competition– a firm producing a higher quality good may conduct marketing activities and alter its packaging to bring this to the attention of
consumers.

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12
Q

What is the term “Marginal Benefit” in Economics?

A

Marginal Benefit is the benefit derived from producing one additional good/service.

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13
Q

What is the term “Marginal Cost” in Economics?

A

Marginal cost is the cost derived from producing one additional good/service.

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14
Q

What is Exchange?

A

Exchange is the view that markets are sites of commerce that facilitate the trade of goods and services.

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15
Q

What is the term “Liberalism” in Economics?

A

Liberalism is the view that all markets should be allowed to function without outside influence.

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16
Q

What is the term “Socialism” in Economics?

A

Socialism is the view that markets should be regulated to provide the best outcome for citizens.

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17
Q

Why is trade considered “Mutually Beneficial” in Economics?

A

Trade is mutually beneficial as both buyers and sellers gain from trade.

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18
Q

What is the term “Competition” in Economics?

A

Competition is where multiple sellers contest a market to attract buyers.

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19
Q

What is the term “Market Failure” in Economics?

A

Market Failure occurs when markets do not perform in an efficient manner.

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20
Q

What is the term “Monopoly” in Economics?

A

Monopoly is when a market is dominated by one seller.

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21
Q

What is the term “Externalities” in Economics?

A

Externalities occur when the market price does not account for all the costs of manufacture and provision.

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22
Q

What is the term “Free Ridership” in Economics?

A

Free Ridership is when resources cannot be exclusively allocated such as a non-taxpayer using the light of a street light to see the path ahead.

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23
Q

What is the term “Asymmetrical Information” in Economics?

A

Asymmetrical Information is when producers restrict access to knowledge in order to sell harmful products such as tobacco or alcohol.

24
Q

What is the term “Circular Flows” in Economics?

A

Circular Flows represent the relationship between economic actors through the flow of goods, services and money.

25
Q

What are the 3 economic actors associated with “Circular Flows” in Economics?

A

The 3 economic actors in circular flows are; consumers, firms and governments.

26
Q

What is the term “Productivity” in Economics?

A

Productivity is a measure of output per worker per unit of time.

27
Q

What two ways can “Productivity” be increased through in Economics?

A

Productivity can be increased through;

Automation: Increased use of machines to augment labour.

Digitisation: Record systems and virtual curation services.

28
Q

What is the term “Money” in Economics?

A

Money is a store of value and a means of exchange in economics.

29
Q

What two roles does “Money” serve in Economics?

A

Money serves as a means of exchange and a store of value in economics.

30
Q

What is the term “Inflation” in Economics?

A

Inflation is the rate at which the price of goods and services increases.

31
Q

What is the inflation target for the Bank of England?

A

The Bank of England has an inflation target of 2%.

32
Q

What are the two forms of “Inflation” in Economics?

A

The two forms of Inflation in Economics are negative inflation and high inflation.

33
Q

What is the term “Negative Inflation” in Economics?

A

Negative inflation is when economic actors delay purchases to wait for prices to lower.

34
Q

What is the term “High Inflation” in Economics?

A

High Inflation is when the prices of good increase dramatically, causing economic actors to lose faith in the store of value of a currency , which causes a migration to other currencies.

35
Q

What are the two systems of measuring Economics?

A

The two systems of measuring economics are: Microeconomics and Macroeconomics.

36
Q

What is the term “Microeconomics” in Economics?

A

Microeconomics is the focus on the decisions made by consumers and firms in a market.

37
Q

What are the 3 factors of “Microeconomics” in Economics?

A

The 3 factors of Microeconomics are utility, production and markets.

38
Q

What is the term “Macroeconomics” in Economics?

A

Macroeconomics is the focus of the workings of large scale economic systems such as international trade or government fiscal policy.

39
Q

What are the two main factors of Macroeconomics?

A

The two main factors of Macroeconomics are international trade and government fiscal policy.

40
Q

What is the term “International Trade” in relation to Macroeconomics?

A

International trade is the measure of how countries balance their imports/exports to make a profit or influence the economy in Macroeconomics.

41
Q

What is the term “Government Policy” in relation to Macroeconomics?

A

Government Policy is the measurement of how fiscal and monetary policy can affect the economy in Macroeconomics.

42
Q

What is the term “Factors of Production” in Economics?

A

Factors of production represent the resources used in an economic activity.

43
Q

What are the 4 standard “Factors of Production” in Economics?

A

entrerThe 4 factors of production are; land, labour, capital and entrepreneurship.

44
Q

What does the term “Land” mean as a Factor of Production in Economics?

A

Land as an FOP, is the natural capital of economics, commonly obtaining natural resources such as water, soil and minerals.

45
Q

What does the term “Labour” mean as a Factor of Production in Economics?

A

Labour as an FOP, is the overall effort of workers inclusive of physical and mental activities.

46
Q

What does the term “Capital” mean as a Factor of Production in Economics?

A

Capital as an FOP, are the resources previously manufactured to aid production such as tools, infrastructure, machinery and factories.

47
Q

What does the term “Entrepreneurship” mean as a Factor of Production in Economics?

A

Entrepreneurship as an FOP, is to take the previous FOP’s (Land, Labour and Capital) in order to organise and creatively make a profit from them.

48
Q

What are the two forms of “Wants” in Economics?

A

Wants are divided into two categories; Necessities and Desires.

49
Q

What is the term “Desires” as a form of “Want” in Economics?

A

Desires are luxuries which improve our quality of life such as: entertainment, TV or holidays.

50
Q

What is the term “Necessities” as a form of “Want” in Economics?

A

Necessities are fundamental requirements of human life such as: food, water, shelter, security and health.

51
Q

What is the term “Production Possibility Frontier” in Economics?

A

Production Possibility Frontier’s (PPF’s) is a chart that demonstrates how much of a good that can be produced given a fixed amount of resources. (See noted for chart itself)

52
Q

What do the terms “Convex” and “Concave” mean in relation to charts in Economics?

A

Concave means curving inward—like the shape of the inside of a bowl. Convex means curving outward—like the shape of the outside of a contact lens.

53
Q

For the term “Production Possibility Frontier” what does it mean when the points exist outside the convex curve?

A

When a point is outside the Convex curve of a PPF chart, production is impossible and thereof inefficient.

54
Q

How does the term “Opportunity Cost” apply to a PPF curve in Economics?

A

Opportunity Cost applies to a PPF curve as when the point is moved more resources are allocated to one product to benefit its production at the detriment of the other product given the fixed resources of the PPF.

55
Q

What does the term “Economic Growth” apply to a PPF in Economics?

A

Economic Growth applies to the PPF by shifting the curve right through either technological advancement or capital accumulation.

56
Q

How does “Trade” affect the PPF when two firms are involved?

A

Trade affects the PPF through two firms realising they can use their advantages of producing guns or buns to trade resources between each other to compensate the products they each lack in producing.

As such creating a further “Trade Line” which exists outside of their individual PPF lines which act as the new frontier for possible goods obtained through trade.

Y1 OF L&E (7 decks)

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