Introduction to economics

Question 1

State the purpose of a consumer? (2 marks)

Answer 1

• Consumers buy goods and services for their own consumption

- Consumers put a price on how much they value goods and services

Question 2

State the purpose of producers? (2 marks)

Answer 2

• Supply goods or services (firms)
• Want profit
• Suppliers choose what and how to produce
• Affecting the quality price

Question 3

State the purpose of governments? (2 marks)

Answer 3

• Group of people that have the power to run a country
• Influenced by what’s best for the society
• Changing tax rates, changing level of unemployment benefit

Question 4

State the 3 main economic groups? (2 marks)

Answer 4

Consumers, Producers and Government

Question 5

State what is meant by ‘Scarce resources’. (2 marks)

Answer 5

Scarce resources is the insufficient amount to satisfy all wants

Question 6

Explain what is meant by ‘Unlimited wants’. (2 marks)

Answer 6

Unlimited wants is the infinite desire for something. For example the limited resource of oil, unlimited competing used for it such as petrol and central heating.

Question 7

Explain what is meant by ‘Interdependence’. (2 marks)

Answer 7

Where one group responds to the actions of another group. An example of this would be milk production. Governments pay subsidies to farmers to produce more, farmers then increase production and can accept a lower price, therefore consumers can produce more milk.

Question 8

State what is meant by the ‘Economic Problem’. (2 marks)

Answer 8

How best to use the limited resources to satisfy the unlimited wants of people.

Question 9

Explain what is meant by opportunity cost. (2 marks)

Answer 9

The next best alternative when making a choice. For example, if someone chose chocolate over cake, the opportunity cost was the cake.

Question 10

State what is meant by a ‘Want’. (2 marks)

Answer 10

Something a consumer would like to have but is not essential for survival.

Question 11

State what is meant by a ‘Need’. (2 marks)

Answer 11

Something a consumer has to have to survive.

Question 12

State the 4 Factors of production. (2 marks)

Answer 12

Capital
Enterprise
Land
Labour

Question 13

Explain what Capital is. (2 marks)

Answer 13

Capital is human made aids to production. For example, machinery, tools, factory’s and transport.

Question 14

State what Enterprise is. (2 marks)

Answer 14

Enterprise takes a risk in organising the 3 other factors. Individual known as an entrepreneur.

Question 15

Explain what Land is. (2 marks)

Answer 15

Land is the natural resources in the economy. For example, raw materials, oil, coal, trees and the sea.

Question 16

State what labour is. (2 marks)

Answer 16

Labour is concerned with the workforce, human resources that are available.

Question 17

Explain the 3 key parts to solving the ‘Economic problem’.(6 marks) (2 marks for each section)

Answer 17

WHAT- What should be produced. For example, should resources be used to make hospitals, fizzy drinks or defence weapons) Or, free NHS vaccines, less time of work, more taxes paid.

HOW- How should goods and services be produced? For example, technology, large scale production, skilled craftsman-ship - lowest cost to produce most profit.

WHOM- Who should it be produced for ? For example, should it be for those with most money or those with special needs. Or education, higher skilled, better jobs, higher taxes?

Question 18

State what is meant by ‘Economic choice’.(2 marks)

Answer 18

An option use for a scarce resource.

Question 19

Explain what is meant by ‘Economic sustainability’. (2 marks)

Answer 19

Economic sustainability is decisions are made that make financial sense for the future lead to growth development or the economies. For example, cost of production, price consumers pay, reduces employment through jobs to construct new cross rail, less benefit payments paid by government.

Question 20

Explain what is meant by ‘Social sustainability’. (2 marks)

Answer 20

Social sustainability is the impact of development or growth that promotes an improvement in quality of life for all. For example, cross rail- more people using trains less emissions from cars, COST- use greenbelt land.

Question 21

Explain what is meant by ‘Environmental sustainability’. (2 marks)

Answer 21

Environment is protected, so earth can support humans now and in the future. COST- 3rd Heathrow runway - more flights, more oil - non renewable - significant impact on future life. Factories in the countryside - bad for local residents in terms of noise and air quality.