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A-Level Economics > Mr Boughen > Flashcards

Mr Boughen Flashcards

1
Q

What is economics?

A

A social science concerned with the production, distribution and consumption of goods and services, and the transfer of wealth

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2
Q

What is microeconomics?

A

The study of economics built from the actions of individuals, firms and government in markets

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3
Q

What is macroeconomics?

A

The study of economics viewing the whole economy at one, and splitting it into different areas.

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4
Q

What is scarcity?

A

When demand for a resource is greater than supply as resources are limited

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5
Q

What are Economic goods?

A

Goods that are scarce

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6
Q

What are free goods?

A

Goods such as the earth’s atmosphere that are not normally regarded as being scarce

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7
Q

What does rationality mean?

A

Economic agents acting in their best interests

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8
Q

What is utility?

A

The benefit derived from the consumption of a good or service

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9
Q

What is incentive

A

A thing that motivates or encourages someone to do something

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10
Q

What is a positive statement?

A

A statement that is based solely on facts

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11
Q

What is a normative statement?

A

A statement involving a value judgement about what ought to be

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12
Q

What is a value judgement?

A

A statement based on your opinions or beliefs, rather than on facts

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13
Q

What are factors of production?

A

They are resources used in the production process, or inputs into products

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14
Q

What are the factors of production

A

Land, Labour, Capital, Enterprise

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15
Q

What is the reward for land?

A

Rent

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16
Q

What is the reward for labour?

A

Wages / salaries

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17
Q

What is the reward for capital?

A

Interest

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18
Q

What is the reward for enterprise?

A

Profit

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19
Q

What are trade-offs?

A

Situations in which the choice of one alternative requires the sacrifice of another

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20
Q

What is opportunity cost?

A

The value of the next best alternative

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21
Q

what does a PPC show?

A

a curve that shows the maximum combinations of goods or services that can be produced in a set period of time given available resources

22
Q

what are capital goods?

A

goods that are used in the production process, such as machinery or factory buildings

23
Q

what are consumer goods?

A

goods produced for consumers to use

24
Q

What is a market economy?

A

market forces are allowed to guide the allocation of resources within a society (eg Taiwan)

25
Q

what is a centrally planned economy?

A

the government guides resource allocation within a society (eg North Korea)

26
Q

what is a mixed economy?

A

a combination of market forces and government intervention which guides the allocation of resources within a society (eg UK)

27
Q

what is the invisible hand?

A

a term used by adam smith to describe the way in which resources are allocated in a market economy

28
Q

what is marginal principle?

A

the idea that economic agents may take decisions by considering the effect of small changes from the existing

29
Q

what is rational decision making?

A

a decision that allows an economic agent to maximise their objective, by setting the marginal benefit of and action equal to its marginal cost

30
Q

what is marginal utility?

A

the ADDITIONAL utility gained from consuming an extra unit of a good or service

31
Q

what is law of diminishing marginal utility

A

states that the more units of a good that are consumed, the lower the utility from consuming those additional units

32
Q

what is specialisation?

A

the process of concentrating on a task or activity in order to become expert in it

33
Q

what is division of labour?

A

a process whereby the production is broken down into a sequence of stages, and workers are assigned to particular stages

34
Q

what is a barter system?

A

an economy without money so that transactions in goods or services rely on direct exchange

35
Q

what is labour productivity?

A

output per worker, per unit of income

36
Q

what is the formula for labour productivity?

A

units of output / units of input

37
Q

what is a tax?

A

a compulsory fee levied on individuals or firms by government

38
Q

what is indirect tax?

A

a tax levied on spending on goods or services

39
Q

what is direct tax?

A

a tax charged directly to an individual based on a component of income

40
Q

what is incidence of a tax?

A

the way in which the burden of paying a sales tax is divided between buyers and sellers

41
Q

what is specific tax?

A

a tax of a fixed amount imposed on purchases of a commodity

42
Q

what is ad valorem tax?

A

a tax levied on a commodity set as a percentage of the selling price

43
Q

what is excess burden of a sales tax?

A

the deadweight loss to society following the imposition of a sales tax

44
Q

what is polluter pays principle?

A

an argument that a firm causing pollution should be charged the full external cost that it inflicts on society

45
Q

what is a subsidy?

A

a grant given by the government to producers to encourage production of a good or service

46
Q

what is government expenditure (state provision)?

A

where the government decides which goods or services to provide and then spends money providing them

47
Q

what is price control?

A

a legal maximum or minimum price

48
Q

what is a price floor?

A

a legal minimum price (eg minimum wage, alcohol minimum unit pricing)

49
Q

what is a price ceiling?

A

a legal maximum price (eg rent control)

50
Q

what is a merger?

A

two or more firms joining to form a new firm

51
Q

what is a cartel?

A

an ILLEGAL agreement between firms on price and/or output with the intention of maximising their joint products

52
Q

what are buffer stocks?

A

a scheme intended to stabilise the price of a commodity by buying excess supply in periods when supply is high, and selling when supply is low.

A-Level Economics (2 decks)

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