saturday- first hour of AS revision Flashcards
what is a positive statement?
can be tested using evidence
fact based
objective - can work out if its true or false
what is a normative statement?
opinion based
cant be tested
look for words such as ‘should’ or if the statement is suggesting one action is better than another
what is the basic economic problem?
have finite resources but infinite wants
cant have everything so have to make choices
what is opportunity cost
the benefit lost from the next best alternative that was given up
what is a PPF ?
shows all the possible combination of two goods we can produce using all of the factors of production efficiently
what does it mean if a firm is producing inside the PPF curve?
arent using resources efficiently
productively inefficient
what does it mean if a firm is producing on the PPF curve?
producing efficiently
what is resource depletion?
where there are fewer resources because resources are destroyed/ used up
what is potential growth?
where maximum possible output increases because of increased resources/ better tech
PPF shifts outwards
what is actual growth?
where the amount of output produced increases because existing facotr are being used more effectively
shows by drawing a new point further outwards on PPF
what does it mean if the PPF curve is concave
if factors arent perfectly substitutable the PPF is concave to the origin
what is a factor mobility?
switching our resources from one use to another
what is occupational mobility?
how well factors can switch from one job to another
what is geographical mobility?
how well factors can be moved around
what are wages?
what is a salary?
any payment for labour- wage
fixed pay per period of time- salary
what are consumer + capital goods
consumer- consumed directly for their utility
capital- goods which are used to make other goods
what is specialisation?
when production process is split up
employees given specific tasks
workers specialise in these special tasks
what is the advantages of the division of labour?
higher efficiency/ productivity
higher quality
lower prices
better use of scarce resources
potential higher pay for workers
more profit so owners can buy more machines
what are the disadvantages of the division of labour?
bored of job - fall in quality and quantity of goods
fewer people will want to work there - absenteeism
businesses profit my fall
difficult to see workers which are doing well
workers have less pride in their work
less flexibility if someone is absent/leaves
workers may not have as many transferrable skills if firm shuts down
what is the circular flow?
a model of the economy where the major exchanges are represented as flows of money, goods and services between economic agents
what is it assumed that households own?
own all factors of P (LLC)
households sell these to firms to earn rent, wages and profit
all money earnt is then spent on goods produced by firm
what are the 3 injections into the economy?
govt spending
exports
investment
what are the 3 withdrawals?
taxation
spending on imports
saving
what is GNP
what is the difference between GDP and GNP?
adv of GDP
limitations of GDP
benefits of growth
costs of growth
evaluations of the impact of economic growth
