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SOSE > Economics Week 5 > Flashcards

Economics Week 5 Flashcards

0
Q

Needs

A

Things you need to survive, eg. adequate food, shelter, clothing and fresh water

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1
Q

Economics

A

It is how individuals, groups and whole societies go about satisfying their needs and wants

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2
Q

Wants

A

Things you own or would like to own but dot necessarily need to survive. They are unlimited and changeable with age, income and lifestyle.

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3
Q

Goods

A

Things you can see and touch

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4
Q

Sevices

A

Something provided to you by others with the exchange of money

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5
Q

Collective Goods and Services

A

Goods and services are whole community needs or wants eg. Defence force, ovals. Usually provided by the government

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6
Q

Consumer

A

Someone who purchases goods and services to satisfy their needs and wants

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7
Q

Economic Systems

A

The way resources are organised in order to produce as many as possible of the goods and services people want

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8
Q

Demand

A

Denotes the amount of a particular good or service that businesses are willing to buy at a particular price

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9
Q

Supply

A

Denotes the particular price of a particular good or service that a business is willing to sell at a particular price

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10
Q

Market Equilibrium Price

A

The price a which the quantity demanded is equal to the quantity supplied

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11
Q

Market Economy

A

Is one in which most economic decisions are made by the buyers and sellers

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12
Q

Opportunity Cost

A

The cost of an alternative that it’s be forgone in order to pursue a certain action. The benefits you could receive by taking an alternative action

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13
Q

Scarcity

A

Where people haw unlimited wants but resources are limited and decisions must be made to allocate resources efficiently

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14
Q

Economic Problem

A

That there is an unlimited number of wants but a limited resources absolve to statisfy. Is how to allocate scarce resources within the economy

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15
Q

Law of Demand

A

The higher the price, the lower the quantity demanded. This is because the consumers opportunity cost to acquire goods and services increases and they must make take offs to afford the new found expense.

16
Q

Law of Supply

A

As the price of something increases, producers will offer more or produce larger amount of the object for sale. Example - When consumers start paying more for cupcakes than donuts, bakeries will increase their output of cupcakes and reduce the amount of donuts in order to increase their profits

17
Q

Resources

A

The economical definition of a resource is a good or service used to satisfy human wants and needs. Land, labour, capital and enterprise

18
Q

Land

A
  • Natural resources; minerals, soil, marine stocks, weather, climate, weather and scenic landscapes
  • Limited in supply
  • Exhaustible
  • Aren’t easily replaceable eg. Iron
  • Some replenish able with renewable management
19
Q

Labour

A
  • Human resources; intellectual or physical effort/skill that goes into producing a good or service
  • Occupations need different things
  • Rapidly changing with higher training/qualifications/education
20
Q

Capital

A
  • Man made or manufactured goods necessary to produce other goods and services
  • Tools, equipment, machinery, roads, bus’s
  • May be either consumer, capital or both goods
  • Jets, trains are capital as they produce a service consumers pay for
  • Spending by a business on capital goods is referred to as an investment or capital expenditure
21
Q

Enterprise

A
  • Human resource; entrepreneurship or entrepreneurial skills
  • Ability to combine all three factors to produce goods and services demanded
  • Successful ones will see an opportunity and create a business for their target
  • Choose low costing three factors to enable best competitive price and best profit
22
Q

Price Mechanism

A

The automatic adjustment of prices in a market, determined by the forces of supply and demand

23
Q

Planned Economy

A
  • Command or Communist System
  • Everything bongs to government or state
  • Government with committees decide on the production outcome
  • Government production units decide on who will do what and how things will be made
  • Enough to meet the plan targets and people are punished when productions weren’t reached
  • China, North Korea
24
Q

Mixed Economy

A
  • Ownership shares between government and private sectors
  • Mixture of govt and private committees decide on production
  • Some government control with free enterprise
  • Mixture of how much the government plans for and how much the private sector is prepared to risk
  • Aus and NZ
25
Q

Capitalist (Market, Free Enterprise Economy)

A
  • Owned by private companies
  • Resources and means of production owned by private individuals or companies
  • Private make decisions on what to produce
  • Private control
  • Rugged individualism
  • Money priority
  • Sell as much as possible, limited by lack of demand only
  • USA
26
Q

Traditional Economy

A
  • Different things are owned by individuals, families or tribes
  • People in a tribe or family decide
  • Traditions, beliefs and customs affect what is made
  • Little surplus
  • Defined by bartering and trading
  • Produce enough to meet short term needs and wants
  • Inuits
27
Q

Contraction

A

Phase of a business where the economy as a whole is in decline

28
Q

Expansion

A

The phase of the business cycle where the economy goes from low to high

29
Q

Factors Affecting Demand

A
  • Aggregate demand
  • Price
  • Size of the market
  • Level of income
  • Distribution of income
  • Disposable income
  • Tastes and preferences
  • Substitute goods
  • Complimentary goods
  • Expectations
  • Credit
  • Size and age of population
30
Q

Aggregate Demand

A

The demand for an entire economy that is calculated by adding all the individuals demands together

31
Q

Sectors of Economy (AUS)

A
  • Household
  • Firm
  • Financial
  • Government
  • Overseas
32
Q

Characteristics of a Market Economy

A
  • Price is determined by a price mechanism including the laws of demand and supply
  • Economic freedom; which includes your own occupation and starting a business - deciding on wha to tell as how much to charge
  • Private ownership of property; which is protected by law
  • Competition; competing for consumers and resources
  • Self interest; motivation by what suits
  • Consumer sovereignty; a consumers preferences control supply
33
Q

Basic Circular Flow Model (2)

A

Assumes that all income is spent on goods and services

34
Q

Three Sector Circular Flow

A

Assumes that people borrow and save. Savings are leakages of income, leaving the flow. These are invested back in as an injection. Savings are seen as income that isn’t spent on consumption. Savings and taxes are leakages of this model.

35
Q

Four Sector Circular Flow Model

A

Assume that if injections are greater than the leakages the economy will expand. If the leakages are greater than the injections the economy will contract. Both savings and taxes are leakage. They are injected back into the economy in the form of investments and government expenditure

36
Q

Five Sector Circular Flow Model

A

Imports are leakages whilst exports are injections. Capital flow (money from overseas for investment) is an injection. Capital outflow (money sent overseas for investment) is a leakage

37
Q

Leakages

A

Withdraws from the circular flow. When households and firms save part of their income it constitutes leakage. They may be in form of tax payments and imports also. Leakages reduce flow of income

38
Q

Injections

A

Introduction of income into the circular flow. When households and firms borrow saving, they constitute injections. Injections increase the flow of income. Take forms of investments, government spending and exports. So long as leakages are equal to injections circular flow of income continues indefinitely.

SOSE (6 decks)

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