economics unit 1 aos 1

Question 1

economics

Answer 1

Economics is the study of how we choose to use limited resources in ways that best help to satisfy our basic needs and unlimited wants.

Question 2

microeconomics

Answer 2

studies the operation of the smaller fragments or units make up the whole economy, such as a particular firm, industry or market.
examines how demand and supply interact in a market to determine an equilibrium price and quantity traded.

Question 3

macroeconomics

Answer 3

takes a wider Birds Eye look at the whole economy and the larger flows affecting overall economic conditions in the country

Question 4

positive economics

Answer 4

refers to facts and statistics about the economy, it is descriptive and factual analysis which can be proven.

Question 5

normative economics

Answer 5

is subjective judgements and evaluations about what the economy should do. It is based on opinions, personal values and lacks numerical evidence.

Question 6

needs

Answer 6

basic necessities required fro ones survival and well-being

Question 7

wants

Answer 7

desires that can be satisfied through the consumption of goods and services.

Question 8

relative scarcity

Answer 8

relative scarcity is the basic economic problem and arises when the available resources are insufficient [limited] to fulfil humans wants and needs [unlimited]

Question 9

resources

Answer 9

factors of production are the inputs used by businesses to produce or supply the goods or services that we need or want.

Question 10

natural resources

Answer 10

are the productive inputs that occur in nature (e.g. soils for agriculture, mineral deposits, forests, native animals, oceans, climate, rivers, clean air and the environment).

Question 11

labour resources

Answer 11

are the intellectual skills, knowledge and manual effort that people provide as members of the nation’s labour force (e.g. those of a doctor, mechanic, retail attendant and banker).

Question 12

Capital resources

Answer 12

involve manufactured or producer goods. Here, capital is seen as the stock of past production that is used to aid current and future production. This includes the physical plant and machinery (that may incorporate new technology) used by a firm to help make other finished goods and services.

Question 13

opportunity cost

Answer 13

is the value of the next best alternative gone when a decision is made.

Question 14

resource allocation

Answer 14

resources are allocated to produce goods and services that cater to both wants and needs.
consumer preferences and market demand influence the allocation of resources.

Question 15

PPF diagram

Answer 15

Is used to illustrate the many production combinations for a country that is able to produce just two products and where all resources are used most efficiently.

Question 16

material living standards

Answer 16

Material living standards refer to an individual’s ability to access goods and services. They are predominantly dictated by ones income.

Question 17

non-material living standards

Answer 17

Non-material living standards are more subjective and harder to measure as they are based on quality-of-life factors such as work-life balance, crime rates, air pollution, health and general levels of happiness.

Question 18

trade-offs

Answer 18

are when businesses, individuals or governments make choices between different ways that scarce resources might be used.

Question 19

economic systems

Answer 19

is a collection of institutions involved in directing and organising the production and distribution of goods, services and incomes.

Question 20

planned economy

Answer 20

Purely planned economies rely entirely on powerful and often non-democratic, dictatorial, central governments to make key economic decisions about what, how, and for whom to produce

Question 21

mixed economy

Answer 21

Mixed economies (also called contemporary market economies) are a hybrid. They involve combining most of the features of market economies with some of the features of planned economies. So, mixed economies typically have both a dominant private sector, as well as a less important government or public sector.

Question 22

market economy

Answer 22

A pure market economy relies solely on the operation markets where buyers, sellers and a system of prices answer the three basic economic questions. Self-interest, competition and private ownership of resources (the private sector) are important elements in this type of economy.

Question 23

traditional economy

Answer 23

Traditional economies today are those that exist only in pockets of other economies, mostly in remote parts of Africa, Asia and South America. Here, the three basic economic questions are answered by families and tribes guided by long-established and time-honoured customs

Question 24

market failure

Answer 24

ineffective allocation of resources where governments must intervene

Question 25

price system/ mechanism

Answer 25

price changes upwards and downwards acts as a signal to tell or inform producers of changing consumer decisions about particular types of goods.

Question 26

three sector flow model

Answer 26

is a simple diagram that shows the three key economic agents or parts making up a mixed economy . It also shows the ways these sectors interact with each other through the four main flows

Question 27

the consumer or household sector

Answer 27

all individuals of this sector are consumers or buyers of goods and services, but some are also the owners or suppliers of resources.

Question 28

producer or business sector

Answer 28

composed of large, medium and small firms making goods and services most of these are privately owned and hence make up the private sector of the economy.

Question 29

government or public sector

Answer 29

includes the activities and decisions of federal, state and local authorities. this group collects various taxes and other revenue from those households earning income, and then uses these to help pay for government spending on the provision of goods and and services for the community. the economic activities of governments make up the public sector.

Question 30

economic activity

Answer 30

relates to the production of goods and services. changes in the rate of economic activity will affect economic growth.

Question 31

public sector

Answer 31

part of the economy involving the government production of goods and services.

Question 32

private sector

Answer 32

includes small, medium and large businesses that are owned by individuals that produce goods and services. Most try to maximise profits.

Question 33

consumer behaviour

Answer 33

looks at how, why, where and when consumers choose to to purchase or not purchase a good or service.

Question 34

incentive

Answer 34

An incentive is an inducement designed to further encourage behaviour that would otherwise not occur to the same extent.

Question 35

disincentive

Answer 35

disincentives try to discourage certain behaviour.

Question 36

marginal benefits from consumption

Answer 36

the law of diminishing marginal utility states that each additional (or marginal) unit of a good or services that is consumed generates less utility (satisfaction) than the previous one.

Question 37

business behaviour

Answer 37

looks at the factors influencing how firms make decisions about the production and sale of particular goods and services.

Question 38

subsidy

Answer 38

A subsidy is money that is paid by a government or other authority in order to help an industry or business, or to pay for a public service.

Question 39

indirect tax

Answer 39

a tax levied on goods and services rather than on income or profits.

Question 40

direct taxes

Answer 40

a tax, such as income tax, which is levied on the income or profits of the person who pays it, rather than on goods or services.

Question 41

economic stabilisation

Answer 41

is to make sure the economy is performing within their objectives by ensuring employment, inflation and GDP is stable by implementing policies to manipulate consumer behaviour