microeconomics Flashcards
what is meant by land?
natural resources eg. sand, rock and wood, that are used in production
what is meant by capital?
man made goods that aid production eg machines and computers
what is labour?
all human mental and physical effort that goes into production
what is meant by enterprise?
skills needed to organise resources into some form of production
what is scarcity
a situation that arises from the fact that people have unlimited wants by resources to meet wants are limited
what is opportunity cost?
cost of giving up the best alternative when a choice is made
how is a ppf shown to be efficient
all points on the boundary are productively efficient because they show a combination of goods and services that best match tastes and preferences
what is productive efficient
occurs when it is impossible to produce more of one good without producing less of another
what is allocative efficiency
`occurs when available resources are used to produce a combination of goods and services that best match peoples tastes and preferences
what is the advantages of division of labour?
enables workers to gain skills in a narrow range of tasks
enables workers to be more productive
most cost effective - cuts training costs
worth while buying capital goods
what are the disadvantages of division of labour
no sense of ownership
stops people learning new skills
if one person doesnt turn it it can delay production
boredom
what is demand
quantity of goods thar consumers are able and willing to purchase for various prices over a period of time
what causes movement along the demand curve
the only thing that causes movement along the demand curve is a change in price called change in quantity demanded
what are the conditions of demand
change in disposable income
change in taste and preferences
price and availability of other products
change in population size
what is consumer surplus and what will change consumer surplus
the difference between what buyers are willing to pay and what they actually pay
a decrease in price would increase consumer surplus
