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Gary Economics > Intodruction To Econmoics > Flashcards

Intodruction To Econmoics Flashcards

1
Q

What is a positive statement

A

A statement that is testable by data

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2
Q

What is a normative statement

A

A statement that is opinionated or concerned with someone’s judgement

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3
Q

What is opportunity cost

A

The benefit lost from the next best alternative

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4
Q

Example of consumer opportunity cost

A

The OC of a large chips is 3 chocolate bars

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5
Q

Example of producer opportunity cost

A

The opportunity cost to produce 3 jumpers is the same as a pair of shoes

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6
Q

Example of government opportunity cost

A

The opportunity cost to build 3 new schools is the same as running a hospital for a year

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7
Q

What is an economy

A

A system that works to solve the economic problem

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8
Q

What is the general economic problem

A

What is to be produced
How should it be produced
For whom is production taking place

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9
Q

What are the 4 main types of resources

A

Land
Labour
Capital
Enterprise

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10
Q

What are renewable resources

A

Is one that can be used repeatably and does not run out as it is naturally replaced

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11
Q

What are free goods

A

Goods that have no opportunity cost upon consumption/ production

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12
Q

What are economic goods

A

Goods and services that are scarce because using those resources means they cannot be used elsewhere

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13
Q

What is productive efficiency

A

Maximised output/ happiness

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14
Q

Allocative efficiency

A

Fully using resources but not in the most efficient way

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15
Q

What is economic growth

A

A rise in a countries productive capacity causes the PPF to shift outwards. This allows an increase in supply and goods

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16
Q

What are capital goods

A

Goods that are used to make consumer goods and services

E.g

17
Q

What are consumer goods

A

Goods and services that satisfy costumer wants directly

18
Q

What is an investment

A

Spending on capital goods

19
Q

What causes outwards shift in PPF

A

More land - more area to produce consumer goods
Education - invention of new products
Machinery - more output ( faster)
High land production - increases output

20
Q

Causes of inwards shifts of the nations PPF

A

Natural disaster
Civil war
Outwards labour migrations due to the drain of skilled workers
Decline in productivity of labourers

21
Q

Production

A

Is a measure of the value of the outputs of goods and services

22
Q

Productivity

A

A measure of the efficiency of factors of production.

Measure by output per person (hour)

23
Q

What is the division of labour

A

The assignment of different parts of a manufacturing process or task to different people in order to improve efficiency

24
Q

What is specialisation

A

The process of concentrating and becoming an expert in a particular field

25
Q

What is a market

A

A place where buyers and sellers can meet to facilitate exchange of goods or services

26
Q

3 ways division of labour increases productivity

A

People work faster when they can focus on one job ( no movement down a production line)
People learn to perfect the task
Increase in productivity = more products which decreases scarcity

27
Q

Advantages of specialisation

A

Higher output
More variety for costumers
Bigger market
Competition which = lower prices

28
Q

What is a free market

A

Competition
Limited government intervention
Motivation and self interest

29
Q

Command market

A

No competition
Lots of government intervention
Producers aims are to meet production targets
Resources are allocated by the state

30
Q

Disadvantages of specialisation

A
  • repetition creates boredom, high turnover in staff and therefore training costs
  • breaking down production makes it easier for a machine to replace workers
  • specialisation creates interdependence, meaning if one area fails the whole production is stopped
31
Q

Functions of money

A

Medium of exchange
Measure of value
Store of value
Method of deferred payment

32
Q

Advantages of free market

A

Competition means that firms have to try and keep production costs down
Firms constantly trying to improve Quality of products
Move variety for choices
Financial incentives

33
Q

Disadvantages of a free market

A
  • monopolies may form, rivals get taken over
  • inequality
  • external costs and benefits are ignored
  • information gaps
  • insufficient quantity of public goods and merit goods
  • erratic swings in business cycle
34
Q

Advantages of command economy

A
  • cooperation between firms leads to high level of output
  • reduction in inequality
  • government limit external costs
  • government fund public goods such as defence
  • government has more control over the economy, smaller swings in business cycle
35
Q

Disadvantages of command economy

A
  • price mechanism cannot operate
  • lack of competition, low productivity, low quality of products, less choice,
  • lack of financial incentives, management do not take risks for profits, labours do not work hard

Gary Economics (23 decks)

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