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AS Economics > Micro > Flashcards

Micro Flashcards

0
Q

What is a positive statement?

A

A fact/statement you can prove or disprove

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1
Q

Economics is the science of _______?

A

Scarcity

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2
Q

What is a normative statement?

A

A judgement/opinion. You can’t prove/disprove this

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3
Q

What are the four factors of production?

A

Land
Labour
Capital
Entrepreneur

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4
Q

What can you use a production possibility boundary for? And what does it show?

A

To illustrate the concept of opportunity cost.

It shows the combinations of two or more goods that can be produced using all available resources efficiently.

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5
Q

How could you shift a production possibility boundary?

A
  1. Better trading

2. More skilled workers

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6
Q

What is the shape of the graph on a production possibility boundary and why?

A

Concaved, because of the relative productivity of the factors of production

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7
Q

What is the market mechanism?

A

A system which allocates scarce resources for alternative uses for a buyers maximum satisfaction.

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8
Q

What are the merits of the market system?

A
  • Self control
  • Maximises satisfaction
  • Government failure will not occur
  • Competition
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9
Q

What are the problems of the market system?

A
  • Public Goods
  • Consumers are irrational
  • Asymmetric information
  • Inequality
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10
Q

Headphones and phones are______?

A

Complements goods

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11
Q

Ford and vauxhall are______?

A

Substitute goods

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12
Q

What do Complementary goods determine?

A

The demand for a product

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13
Q

What is the definition of a market?

A

A mechanism to bring buyers and sellers together

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14
Q

Demand and supply determine…?

A

Price

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15
Q

Demand for a product is…?

A

Quantity at Price per Time Period

16
Q

What is the Law of diminishing marginal product utility?

A

The more you can consume of something the less you value it at

17
Q

What is demand determined by?

A

Price and prices of substitutes

18
Q

What factors effect demand?

A 
Price
Income levels
Consumers tastes and preferences 
Competition
Fashions
19
Q

What is conspicuous consumption?

A

Buying something for the economic status (price)

20
Q

Equilibrium price is where…?

A

Demand equals supply

21
Q

What is ostentatious consumption?

A

Buying something just because of the brand. To show off.

22
Q

What affects supply?

A 
Productivity
Indirect taxes 
Number of firms
Technology
Subsidies 
Weather
Costs of production
23
Q

True or false? Tax reduces supply and subsidies increases supply

A

True

24
Q

What does the elasticity of demand show?

A

It shows the responsiveness in the change in demand

25
Q

Perfectly inelastic means…?

A

It doesn’t matter how much you charge the same number of people will buy it

AS Economics (1 decks)

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