Glossary

Question 1

Resources

1.1

Answer 1

Inputs available for the production of goods and services

Question 2

Wants

1.1

Answer 2

The goods and services that people may like to have but are not always realised

For example new model of an Iphone or a car brand

Question 3

Needs

1.1

Answer 3

Things that are necessery for survival, such as food, water and shelter.

Question 4

Scarcity

1.1

Answer 4

A situation in which wants and needs are greater than the resources available.

Question 5

Choice

1.1

Answer 5

Resources are scarce so individuals, firms, governments have to cosider alternatives

Question 6

Scale of preferences

Answer 6

A list on which you place more urgent wants at the top and the less urgent ones at the bottom.

Question 7

The fundamental economic problem leads to three questions

Answer 7

1. What to produce
2. How to produce
3. For whom to produce

Question 8

Factors of production

1.1

Answer 8

Inputs available in an economy that are used in the production of goods and services.

Question 9

Firm

1.1

Answer 9

Any business that hires factors of production to produce goods and services.

Question 10

Opportunity cost

1.1

Answer 10

The cost expressed in the terms of the next best alternative forgone when a choice is made.

Question 11

Economics

Answer 11

The study of how to allocate scarce resources in the most efficient way

Question 12

Trade-Off

Answer 12

What is involved in deciding whether to give up one good for another good

Question 13

Macroeconomcis

Answer 13

The study of an economy or a group of economies. It studies interactions on a broader level, and also include some from of government involvement.

Question 14

Microeconomics

Answer 14

The study of individual markets (households and firms). It looks at the behaviour and decisions of households and firms and how they interact.

Question 15

Model

Answer 15

A simplified view of reality used to explain economic problems and issues.

Question 16

Positive statement

Answer 16

A statement that is based on facts or actual evidence

Question 17

Normative statement

Answer 17

A statement that is based on the economist’s opinion or value judgement and which cannot be proven

Question 18

Ceteris paribus

Answer 18

A Latin phase meaning ‘other things equal’ or ‘other things are unchanged’

Question 19

Margin

Answer 19

A small change in one variable

Question 20

Short run

Answer 20

time period when a firm can change at least one but not all factor inputs.

Question 21

Long run

Answer 21

Time period when all factors of production are variable but with a constant, such as the state of technology

Question 22

Very long run

Answer 22

Time period when all key inputs into production are variable

Question 23

Land

Factor of production

Answer 23

Natural resources in an economy

Question 24

Labour

Factor of production

Answer 24

human resources available in an economy

Question 25

Capital

Answer 25

a physical resource made by humans to aid production of goods

Question 26

Enterprise

Answer 26

Enterprise involves organising production and taking risk

Question 27

Physical Capital

Answer 27

factors of production such as machinery, buildings, and infrastructure

Question 28

Economic Growth | Short run and Long run

Answer 28

In the short run, an increase in a country's output. In the long run, an increase in a country's productive potential.

Question 29

Human Capital

Answer 29

The value of labour to the productive potential (future growth) of an economy.

Question 30

Specialisation

Answer 30

The process by which individuals, firms concentrate on producing those goods where they have an advantage over others

Question 31

Division of Labour

Answer 31

Where a manufacturing process is split into a sequence of individual tasks.

Question 32

Private sector

Answer 32

Part of an economy under private ownership

Question 33

Public Sector

Answer 33

Part of an economy under government ownership

Question 34

Privatisation

Answer 34

Where there is a change in ownership from the public to the private sector

Question 35

Emerging economy

Answer 35

One that is making quick progress towards becoming a high-income economy.

Question 36

Excludability

Answer 36

Where it is possible to stop someone from consuming a good

Question 37

Rivalry

Answer 37

Where the consumption by one person of a good reduces the availability of the good for others

Question 38

Private goods

Answer 38

Rival and excludable

Question 39

Free goods

Answer 39

Goods that are not scarce and have zero opportunity cost

Question 40

Public good

Answer 40

Non-excludable and non-rival

Question 41

Free rider problem

Answer 41

Someone who does not pay to use a public good

Question 42

Merit goods

Answer 42

Merit goods are goods for which the social benefits of consumption outweigh private benefits,

Question 43

Demerit goods

Answer 43

demerit goods are goods for which the social costs of consumption outweigh private costs.