Micro 1 - 5 Flashcards

Question

What could cause a PPF curve to shift to the right (reach a previously impossible point)

Answer 1

Increase in productive capacity

Answer 2

Invasions and immigration

Answer 3

Are goods that are demanded and bought by households and individuals

Answer 4

Are goods that are produced in order to aid the production of consumer goods in the future. Some goods can be both consumer and capital goods, for example computers.

Answer 5

When individually, firms, or countries concentrate on the production of one product or task

Answer 6

It allows us to allocate our scarce resources better

Answer 7

1. Specialisation by product E.g BMW 2. Specialisation by Process

Answer 8

1. Individual 2. Firm 3. National

Answer 9

Revised adam smith's ideas of anti-government

Answer 10

Pro government, revised ideas of John Maynard Keynes

Answer 11

1. Efficiency - more output using less input. 2. More profits 3. Lower wages

Answer 12

1. Bored employees 2. People become deskilled, capital could replace workers 3. Over - interdependence

Answer 13

1. Store of value 2. Medium of exchange 3. unit of account 4. Standard of deferred payment

Answer 14

It can be used for future transactions without the fluctuation in it's monetary worth

Answer 15

Accepted by other people

Answer 16

Tells us how much the note or cash is worth

Answer 17

Money is used to express debt

Answer 18

To determine how resources are allocated

Answer 19

Consumers Producers Government

Answer 20

To maximise utility (Satisfaction)

Answer 21

To maximise profits

Answer 22

Claim tax, economic growth and stability

Answer 23

Individuals are free to make their own choices and own the factors of production without government interference. Resources are allocated through the price mechanism.

Answer 24

There are no completely free markets in the world today , because the government has to intervene at least to an extent, for example by issuing money, and breaking up monopolies. Without this, the market mechanism could not work.

Answer 25

believed in the free market economy approach by governments. He explained how there was an ‘invisible hand’ in the market which allocated resources to everyone’s advantage. He believed competition in the market caused lower prices as firms wanted to be competitive and so this benefits the consumer as they can get goods cheaply.

Answer 26

The system is automatic due to the invisible hand; resources are moved out of production when people stop wanting a good or costs are too high. There is high motivation as people know working hard could lead to high potential rewards, creating conditions where initiative and enterprise flourish.

Answer 27

There tends to be high levels of inequality, since the rich own more factors of production and so can grow richer. There is the problem of externalities.

Answer 28

All factors of production, except labour, is owned by the state and labour is directed by the state. Resource allocation is carried out by the government, rather than the price mechanism.

Answer 29

Karl Marx believed in the command economy and criticised capitalism. Marx believed that capitalist’s profit came from exploiting labour as they underpaid workers for the value that they actually created.

Answer 30

The state provides a minimum standard of living , ensuring no one is extremely poor as there is less inequality. There is less wastage of resources as there is no need for competitive services nor advertising, which is very expensive.

Answer 31

It is impossible for the state to make so many decisions correctly, which could lead to over or under supply and a waste of resources. Decision making will be slow as it has to go through various stages and there could be an increase in bribery and corruption.

Answer 32

This is an economy where both the free market mechanism and the government planning process allocate a significant amount of the total resources in the country

Answer 33

- They prevent the abuse of monopolies, They can protect customers as they pass a large amount of consumer protection laws to protect the consumers from poor quality products or services. - They produce public and merit goods, such as emergency services and transport, and limit the production of demerit goods. - They move income from one group of people to another, from the rich to the poor. They use tax, such as income tax, to take money away from one group then give the money to the poor. - attempt to manage the level of demand in the economy to prevent extremes of too much or too little demand.