Ls2 Flashcards
What are capital goods?
Goods that produce other goods and services
What are consumer goods
Goods which don’t produce other goods and are used by people to satisfy their wants and needs
What are two possible reasons for an economy not being at a point on its ppf
Inefficient use of resources
Or underutilisation of resources
What is the difference between positive and normative statements
Positive statements are objective and can be proven true or false
Normative statements are subjective and cannot be proven true or false(words that suggest a statement is normative includes:fair, unfair, should, want, better, worse
What is specialisation
When an individual,firm region or countries concentrates on the production of a limited range of goods and services
What is the division of labour
The specialisation of workers on specific tasks in the production process
What is productivity and how is it measured?
Productivity is the effectiveness of productive effort and it is usually measures in terms of the rate of output per unit of input
What does increased productivity lead to
Higher quality and output
Higher living standards
More efficient use of resources
What are the advantages of division of labour
Workers become more skilled through repetition of tasks
Time is saved by workers focussing on a narrow range of tasks
Workers are easier and cheaper to train
Overall benefit for firms:greater quality and higher quantity of output
Overall benefit for workers:higher skill levels and potential higher wages
What are the disadvantages of division of labour
Repetition of tasks can lead to boredom and cause morale to drop
Simplified job roles can reduce the pride workers feel in their job
What is the overall benefit for the economy of division of labour:
Higher quantity and quality of goods with more efficient use of resources
Leads to higher trade with other countries
Which leads to more economic growth and higher living standards with more disposable income injected into the economy
What are the functions of money
Medium of exchange :something commonly accepted in exchange for goods and services
Measure of value:the price of a good reveals it’s value
Store of value :value is maintained and can be kept for a long time
Method of deferred payment:allows debt to be created
What are demerit goods
Goods that are harmful to or don’t benefit society/the economy
What is planning?
The process by which a government allocates resources.This is funded through taxation
What is a market?
Anywhere buyers and sellers exchange goods and services. This can be physical or digital
