Economics - Unit 1 Flashcards
What is a resource?
Something used to produce an output
What are the factors of production?
Labour - human input they have different skills and if they have a higher human capital then they are more productive
Land - land itself and the natural resources
Capital - goods that are used to produce other goods and services
Enterprise - taking risks and having. Ideas
What is the primary sector?
The extraction of raw materials e.g. Mining
What is the secondary sector?
Raw materials manufactured into goods
What is the tertiary sector?
The service sector
What is opportunity cost?
The next best alternative forgone when making a choice because the scarcity of capital economic problem and unlimited needs and wants
What is a market?
Where buyers and sellers meet to exchange goods
What is the market economy?
Where all the resources are allocated by private individuals and groups
What is a planned economy?
Where all resources are allocated by the government
What is a mixed economy?
Were some resources are allocated by the government and others by individuals or groups
What is the public sector of the economy?
The government sector of the economy which are organised and owned and ran by the government
What is the private sector of the economy?
The sector of the economy where firms are owned and run by private individuals and groups were their main aim is profit maximisation
What are the benefits to specialisation?
- workers become more productive
- lower average costs due to increased productivity
- production levels are increased
- higher pay
- specific skills improved
- motivation from job satisfaction
What are the costs of specialisation?
- increased cost of training workers
- workers become bored and quality may suffer
- more expensive workers
- borden due to lack of variety
- other skills suffer
- eventually replaced by machinery
What is the medium of exchange?
Handing over money for an item
What is the unit of account?
Measuring the value of money
What is the store of value?
When it keeps it value
What is means of deferred payment?
Borrowing money
What is a competitive market?
A market situation in which there are a large number of buyers and sellers
What are the areas of competition?
- price
- quantity
- promotions
- branding
- advertising
- innovation
What are the benefits of a competitive market for a consumer?
Shop around for the highest quality and lowest prices
Variety
Good consumer service
What are the costs of a competitive market for a consumer?
Small firms cant gain economies of scale so cannot provide low costs
Confusion
What are the benefits of a competitive market for a firm?
Gain market share
Grow larger
Able to provide goods and services at a price that are willing to pay it will thrive
What are the costs of a competitive market to a firm?
Monopolies can drop prices
Fail to satisfy consumers so it will fail
What is the economic problem?
Wants are infinite but resources are limited and scarce
