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Economics - Ethan Parmar > Micro T1 > Flashcards

Micro T1 Flashcards

1
Q

What is a social science -

A

The study of society and the relationships of individuals within

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2
Q

Given an examply of eco as a social science

A

Supply and demand theory

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3
Q

What is a value judgement

A

A statement based on a view or opinion

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4
Q

What is a normative statement

A

Statements that cannot be rejected by looking at facts, they cannot be measured and are ethical and moral

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5
Q

What are positive statements

A

Statemetns that can be tested against real world data

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6
Q

Are positive statements true

A

No not always

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7
Q

What is eco activity

A

The production distribution and consumptions of goods and services

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8
Q

What is eco welfare

A

The benefit individuals gain from allocation fo resources

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9
Q

What is the point of eco activity

A

Satisfy wants and needs with goods and services

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10
Q

What are key economic descions

A

What to produce
How to produce
Who is beneifted from the good or service produced

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11
Q

When will economic welfare increase

A

When wants and needs are catered for

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12
Q

What is a fundemental economic problem

A

Scarcity

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13
Q

What is scarcity

A

The lack of resoruces

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14
Q

What are some consequences of scarcity

A

Wants and needs not met
Opportunity cost
Conflict in how to allocate resources
Allocation resource will not benefit all

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15
Q

What are the types of goods

A

Economic
Free

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16
Q

What are economic goods

A

Goods which are scarce and have an opportunity cost

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17
Q

What are free goods

A

Goods which have no opportunity cost

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18
Q

What is welfare

A

The happiness of humans

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19
Q

Is short term happiness always good

A

No it can lead to long term negative affects

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20
Q

What is needed to create goods and services

A

The four factors of production

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21
Q

What are the 4 factors

A

Land
Labour
Capital
Entrepreneuship

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22
Q

What is the ultimate reward of the factors

A

Factor income - wages, rent, interest, profit

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23
Q

Who are the key economic players

A

Consumers
Workers
Firms
Government

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24
Q

What are the roles of consumers

A

To purchase products

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25
Q

What is the role of workers

A

To manufcature

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26
Q

What is the role of firms

A

To allocate resources

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27
Q

What is the role of the government

A

To maintain a thriving economy

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28
Q

What are some conflicting interest of the key players

A

Consumers want low prices, firms want high
Workers want high wages, firms want low costs
The goverment wants regulation and saftey, firms want low costs
Consumers want good quality products, firms want low costs

29
Q

What is the free market

A

Where there is little government involvement, their main role is to ensure rules are fair

30
Q

What is an intervensionist economy

A

Where the government are involved in the markets mechanisms, etc

31
Q

What are some features of a free market economy

A

High value of things that are demanded and scarce
Suppliers want to supply higher value products

32
Q

What is the incentive function

A

Where producers are encouraged to supply more when prices rise to gain more profit

33
Q

What is the signaling function

A

Where price changes, demonstrating; where resouces are required or not and what is scarce

34
Q

What will firms do if prices rise due to higher demand

A

Expand production to cater for higher demand

35
Q

What will firms do if there is excess suply in a market

A

Lower prices to eliminate the supply surplus

36
Q

What is the rationing function

A

When there is scarcity , therefore prices rise so only those willing and able to pay will purchase a product

37
Q

When does the rationing function occur on a graph

A

When S shifts to the right, and the equilibrium is higher on the demand curve

38
Q

What will households do when their is scarcity

A

Proportion their incomes

39
Q

What are ways to deal with scarcity

A

Leave it to the free markeet
Leave it to the government

40
Q

How would the free market deal with scarcity

A

Distribute resources according ot consumer preferences as of their incentive for profit

41
Q

How would the government deal with scarcity

A

Distribute resources failry, to avoid issues and externatlities such as inequalityof distributions

42
Q

What is opportunity cost

A

The loss of choosing x instead of y

43
Q

What are some things that come under OC

A

Time
Money
Resources
Life choices

44
Q

How can we improve the quality of our resources

A

Improve our 4 factors of production

45
Q

Why would improving labour improve the quality of our resources

A

As they are more:
Skilled, knowledgeable, motivated

46
Q

What has the government done to improve human capital

A

Improved education
Mandaotry education
Subsidised training schemes

47
Q

Who came up with the idea of the division of labour

A

Adam Smith

48
Q

What is the division of labour

A

Where production is split for different groups of workers

49
Q

What are benefits of the division of labour

A

Specialisation

50
Q

What does specialisation lead to

A

Increased productive
Higehr quality products
Efficency
Lower costs
Economies of scale

51
Q

What does a production possibility diagram illustrate

A

The different features of the key economic problems

52
Q

What are some of the key economic problems

A

Scarcity
Resource allocation
Opportunity Cost
trade offs
Unemployment
Eco growth

53
Q

When does productive efficiency occur

A

When there is minimum average costs
Where there is little waste of resources

54
Q

Where will productive efficency be seen on the graph

A

On the boundary, but this doesnt mean they have the best combination of resources

55
Q

What is allocative efficiency

A

Where the resources used to produce a combination of goods and services, best match wants and needs

56
Q

What is there always going to be with allocative efficiency

A

Opportunity cost

57
Q

When on a PPB can you increase the production of 2 things?

A

When the economy either grow or production potential increases

58
Q

What does it mean if there is a point on the PPB

A

There is full productivity

59
Q

What does it mean if there is a point in the PPB

A

Resources are not being used to full capacity

60
Q

What does it mean when there is a point beyond the PPB

A

Nothing, it is not possible for there to be a point

61
Q

When would a PPB shift occur

A

When the capacity of the economy is increased

62
Q

How to increase a PPB

A

Increase labour productivit y
Tech changes
New resources

63
Q

What is a mixed economy

A

Where part of the economy is apart of the free market and part is managed by the government

64
Q

How do mixed economies occur

A

When most businesses are ran by private enterprise

65
Q

What part of the economy do the government manage

A

Public services
Regulation

66
Q

Does any point on the PPB suggest they are using the best combination of resources to maxamise welfare

A

No

67
Q

When can you increase the production of both products

A

When the firm expands and grows the quantity of its resources

68
Q

How can you increase output and welfare

A

By changing the allocation of resources

Economics - Ethan Parmar (73 decks)

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