Paper 1 Key Terms

Question 1

Producer

Answer 1

A person, company or country that makes, grows or supplies goods and/or services

Question 2

Factors of Production

Answer 2

The resources in an economy that can be used to make goods and services i.e. land, labour, capital and enterprise

Question 3

Capital

Answer 3

Capital covers human-made aids to production such as machinery, tools, factory buildings and transport

Question 4

Scarce resources

Answer 4

When there is an insufficient amount of something to satisfy all wants

Question 5

Unlimited wants

Answer 5

The infinite desire for something

Question 6

Economic problem

Answer 6

How to best use limited resources to satisfy the unlimited wants of people

Question 7

Economic choice

Answer 7

An option for the use of selected scarce resources

Question 8

Economic sustainability

Answer 8

The best use of resources in order to create responsible development or growth

Question 9

Social sustainability

Answer 9

The impact of development or growth that promotes an improvement in quality of life for all

Question 10

Environmental sustainability

Answer 10

The impact of development or growth where the effect on the environment is small and possible to manage

Question 11

Market economy

Answer 11

An economy in which scarce resources are allocated by the market forces of supply and demand

Question 12

Factor market

Answer 12

Market in which the services of the factors of production are bought and sold

Question 13

Product market

Answer 13

Market in which final goods and services are offered to consumers, businesses and the public sector

Question 14

Market demand

Answer 14

The total demand for a good or service, found by adding together all individual demands

Question 15

Tax

Answer 15

A compulsory payment to the government

Question 16

Elastic demand

Answer 16

When the percentage change in QD is greater than the percentage change in P

Question 17

Inelastic demand

Answer 17

When the percentage change in QD is less that the percentage change in P

Question 18

Efficiency

Answer 18

The optimal production and distribution of scarce resources

Question 19

Allocation of resources

Answer 19

How scarce resources are distributed among producers, and how scarce goods and services are allocated among consumers

Question 20

Market forces

Answer 20

Demand and supply factors that determine price levels and the availability of goods

Question 21

Production

Answer 21

The total output of goods and services by a firm or industry in a period of time

Question 22

Productivity

Answer 22

One measure of the degree of efficiency in the use of factors of production. Measured in terms of output per unit of input.

Question 23

Labour market

Answer 23

Where workers sell their labour and employers buy the labour

Question 24

Supply of labour

Answer 24

The total number of people willing and eligible to supply their labour

Question 25

Pension

Answer 25

A fixed amount paid at regular intervals to a usually retired person

Question 26

Medium of exchange

Answer 26

Anything that sets the standard or value of goods and services acceptable to all parties involved in a transaction

Question 27

Financial sector

Answer 27

Consists of financial organisations and their products and involves the flow of capital

Question 28

Investment

Answer 28

The purchase of capital goods that are used to produce future goods and services or an asset purchased to provide an income in the future and/or to be sold at a profit.

Question 29

Building society

Answer 29

A mutual financial institution that is owned by its members. Its primary objectives are to receive deposits from its members and to lend money for members to purchase property

Question 30

Insurance company

Answer 30

Financial institution that guarantees compensation for specified loss, damage or illness in return for an agreed premium

Question 31

To increase PES

Answer 31

Increase capacity, keep stock levels high and train staff so they can switch easily between tasks