Exam 1 Flashcards
(70 cards)
A Resource can be defined as…
Anything that can be used to produce goods & services.
Scarcity arises because…
Wants are unlimited by resources are limited.
Characteristics of wants.. (4)
- Unlimited
- Change over time
- Differ in importance
- Must be chosen between.
The key economic issues (4 questions)
What to produce?
How much to produce?
How to produce?
How to distribute production?
Opportunity cost…
The next best alternative forgone when an economic decision is made.
Production is…
Any activity undertaken to satisfy the wants of humans.
A production possibility frontier shows how…
Opportunity cost arises when individuals/society make choices.
PPFs are based of 5 assumptions…
- Economy only produces 2 goods.
- Technology is constant.
- Resources amount is unchanged.
- All resources are fully employed.
- Resources are interchangeable between outputs.
Ways a PPF can be expanded.(2)
- Increased efficiency (eg Technological advancement).
2. Aquire more resources.
If a PPF expands…
Economic growth will have taken place.
Way a PPF can achieve lower.
Underemployment of resources (physical or human).
Consumer goods….
Instant gratification.
Capitol Goods…
Produced means of production.
Contribute to economic growth.
Future implications of consumer goods…
At the expense of investment.
Reduced capacity to produce in the future.
Constrains future consumption.
Invest/Create Capitol goods now…
Increased productive capacity in the future.
More economic growth.
More consumption in future.
Factors underlying economic descision making.
Individuals choose between…
Spending and saving
Individuals decision making could be based on… (5 with examples)
- Age - young and dumb?
- Income - lots to spend or little left over?
- Expectations - Economy rise or fall?
- Family Circumstances - Family?
- Future plans - Retire? Further education?
Economic decision making underlying FURTHER EDUCATION
Foregone income and educational costs —> Higher paying job
Economic decision making underlying START A FAMILY
Cut spending - one partner go without income
Economic decision making underlying RETIRE
Enough money for a comfortable life? Adjust to lower income but more chance to consume.
Economic decision making underlying POLITICAL VOTING
Will Govt cause unemployment and inflation? - Bad for individuals.
Factors of production… (4)
Land.
Labour.
Capitol.
Enterprise.
Businesses face decisions in 3 areas…
- Pricing
- Production and Resource use
- Industrial Relations
Economic factor underlying PRICING… (3)
Price high and sell a few less? or
Price low and sell much more?
Marketing Strategy - Exclusive group or mass market?