micro Flashcards
scarcity
having unlimited wants, but limited resources
trade off
all points on PPC
what is economics
social science concerned with the efficient use of scare resources to achieve maximum satisfaction of economic wants
(study of how individuals and societies deal with scarcity)
what is microeconomics
study of small economic units such as individuals firms and markets
examples of micro economics
supply and demand in specific industries, production costs, labour markets
what are economic goods
most goods are scarce they normally command a price - they have monetary value
what are free goods
some goods are not seen to be scarce - there is no opportunity cost or rivalry to consume them
what is a positive statement
a statement which is based on factual evidence which can be tested. they are objective
what is a normative statement
a statement which is based off opinions or value judgements. they are subjective
what is a need
a need is something that is necessary for life - it’s something that you have to consume to survive or live in society
what is a want
a want is something that an individual may like to consume but it isn’t absolutely necessary
what is scarcity
scarcity means that choices have to be made. we can’t satisfy all of our wants. individuals, organisations and governments all have to prioritise their consumption
what is the ppc/ppf
a model that shows alternative ways that an economy can have it’s scarce resources.
graphically demonstrates scarcity, trade-offs, opportunity costs, and efficiency
what are the 4 key assumptions for ppc
only 2 goods can be produced
full employment of resources
fixed resources
fixed technology
what is opportunity cost
the cost of something, in terms of the lost benefit of the ‘next best’ alternative given up, when a choice has to be made
3 shifters of the ppc
change in resource quantity or quality
change in technology
change in trade (more consumption)
what is specialisation
specialisation is the concentration by a worker, group of workers, firm, region or whole economy on a narrow range of goods and services
what is division of labour
when a business has employees working on one small part of a product. the workers specialise - each worker concentrates on doing one task. mm a manufacturing business this would be used with flow production
advantages of division of labour
increased productivity
little training is needed and necessary skills are gained quickly
low skilled workers become efficient at their task
cheaper labour can be hired
the production process can be mechanised more easily
disadvantages of division of labour
workers can feel alienated
motivation can be poor
quality may suffer is workers have less pride in their job
mass produced standardised goods lack variety
narrowly skilled workers may find it hard to gain work elsewhere (structural unemployment)
what is a coincidence of wants
economic phenomenon where two parties each hold an item that the other wants, so they exchange these items directly without any monetary medium
what is the barter system
exchanging goods and services on the basis of individual wants - what you have to offer
what is an economic system
the method used by a society to produce and distribute goods and services
what are the three economic questions
what goods and services should be produced
how should these goods and services be produced
who consumes these goods and services
