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AQA A-level Economics > Micro : The Economic Problem > Flashcards

Micro : The Economic Problem Flashcards

1
Q

Ceteris paribus definition

A

All other things remain equal

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2
Q

Normative statement definition

A

Subjective statements which contain value judgement (Opinions)

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3
Q

Positive statement definition

A

Objective statements that can be tested by referring to the available evidence (Can be tested to see wether economic ideas are correct)

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4
Q

List four factors of production

A

Land
Labour
Capital
Enterprise

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5
Q

Free goods example

A

Air

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6
Q

Economic agents

A

Producers
Consumers
Government

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7
Q

Economic problem

A

How to distribute/allocate scare resources

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8
Q

Capital definition

A

Equipement used to produce goods and services

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9
Q

Enterprise definition

A

Willingness to take risk to create profit

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10
Q

What does PPF show

A

The maximum amount of two goods or services an economy can produce

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11
Q

Trade off definition

A

Choice between two conflicting objectives. Involves compromise

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12
Q

PPF Notes

A

All points on the PPF are productively efficient however they are not all allocatively efficient

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13
Q

Points outside the PPF are

A

Not achieveable

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14
Q

Points inside the PPF are

A

Productively efficient

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15
Q

Opportunity cost definition

A

The next best alternative that you give up in making that decision

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16
Q

What causes the PPF to shift outwards

A

Increased resources
Improvement in technology
Improvement in labour

17
Q

What cause the PPF to shift inwards

A

Decrease in resources (Natural disasters)

18
Q

A free market definition

A

A system of buying and selling goods and services that is not under the control of the government

19
Q

Advantages of a free market

A

Efficient allocation of scarce resources
Competitive prices for consumers
Competition drives innovation & invention bringing higher profits for businesses and better products for consumers.
Increase choice

20
Q

Government failure definition

A

Where government intervention in the economy creates inefficiency and leads to a misallocation of scarce resources.

21
Q

Disadvantage of free market

A

Free market activity can lead to a rise in the scale of income and wealth inequality
Businesses can develop monopoly power which leads to higher prices and damage to consumer welfare

22
Q

What is the public sector

A

The government

23
Q

What is the private sector

A

Businesses that are privately owned

24
Q

Consumers want to

Government wants to

Firms want to

A

Maximise their utility and income

Balance resource of country with goods and services

Maximise their profit

25
Q

The economic problem is

A

Scarcity of resources and unlimited wants

AQA A-level Economics (6 decks)

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