Key Words Flashcards
What is economics?
Economics is the study of how society allocates scarce resources to meet the demands of unlimited wants.
What groups is society comprised of?
Consumers, Producers, Workers and The Government.
Define an economic need.
Give four examples of human needs.
An economic need is essential to life and limited.
1) Water
2) Food
3) Shelter
4) Clothing
Define an economic want.
Give an example.
An economic want is something which is non-essential and unlimited but satisfies a human need.
Coke which satisfies the human need for water.
Give three types of resource.
1) Income
2) Time
3) Factors of production
What is the difference between wage and salary?
Wage is paid weekly and salary is paid monthly.
What is income?
What is a resource?
Income enables the purchase of goods and services.
A resource is something which enables you to do something else.
What is production?
What is consumption?
Production is the act of creating goods and services in order to satisfy human wants.
Consumption is the act of using up goods and services in order to satisfy human wants.
What is a customer?
What is a consumer?
A customer is the person who purchases the good or service.
A consumer is the person who uses the good and service to satisfy their wants.
Give three factors of production and explain what they are.
1) Labour - the physical and mental effort involved in producing goods and services.
2) Land - all natural resources that occur above, on or below the earth’s surface.
3) Capital - is the human made aids made to create goods and services, like: machines, tools, other equipment and the physical plant itself.
What is an entrepreneur?
An entrepreneur is someone who combines different units of factor inputs in different mixes to create goods and services. They balance the risk of failure with the reward of profit.
Describe a good and a service using one word for each.
A good is tangible.
A service is intangible.
What is scarcity?
Scarcity is a situation in which there is a limited amount of resources to meet the unlimited needs of people.
What are economic goods?
Economic goods are good that are created from resources that are limited in supply, which means they are scarce and therefore have a price.
What are free goods?
Free goods are unlimited in supply, they are non-excludable, which means that consumption by one person of a free good doesn’t limit consumption by another.
What are capital goods?
Capital goods are those used to produce consumer (and capital) goods, therby satisfying human wants indirectly.
What are consumer goods?
Consumer goods are those used up to satisfy human wants directly.
Why is choice important in economics?
Give an example of economic choice.
As resources (income, time and factors of production) are scarce (in limited supply), choices must be made about their use. So choices involve the alternative use of scarce resources. CCC can choose to allocate units of land, labour and capital to produce a hospital rather than a school.
What is the opportunity cost?
The opportunity cost of producing or purchasing a product is the benefits that would have arisen from choosing to use the same resources to produce or buy the next best alternative.
What would be the opportunity cost of building the school?
What is it important to ensure when talking about opportunity cost?
The opportunity cost of building a school is the health benefits that would have been gained had the same resources been used to build a hospital.
When talking about opportunity cost ensure the two products are of similar value.
