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Microeconomics > Scarcity and Choice > Flashcards

Scarcity and Choice Flashcards

1
Q

Define positive economics

A

Dealing with the objective or scientific explanations of the working of the economy

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2
Q

Define normative economics

A

Dealing with prescriptions or recommendations based on personal value judgements ( a statement of opinion or belief )

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3
Q

Define factors of production

A

The resources used by firms in the production process. They are the inputs to the production process.

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4
Q

Define land

A

Natural resources, owners of land receive rent for their services

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5
Q

Define labour

A

The workforce of the economy, physical and mental effort expended by humans, owners of labour often receive a wage or salary for their services

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6
Q

Define capital

A

Man made resources not wanted for their own sake but for what they contributed to output, owners of capital receive interest for their services.

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7
Q

Define enterprise

A

The decision-making and risk-taking factor - how all the other factors are brought together, the reward they receive for their services is often profit.

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8
Q

Define factor rewards

A

The income earned by the owners of the factors of production, for their use

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9
Q

Define consumer goods (durable)

A

Goods that can be used repeatedly and for a long time

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10
Q

Define consumer goods ( non-durable )

A

Single-use goods are goods that are used very soon after they’ve been purchased

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11
Q

Define capital goods

A

Purchased by business to be used in the production of other goods and services

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12
Q

Define commercial services

A

Services to industry such as banking and finance

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13
Q

Define direct services

A

Services to the public such as hairdressing, valeting, retail, dentist.

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14
Q

Define public services

A

Services provided by the state such as health, education, police and the emergency services

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15
Q

Define by-products

A

Unintended outputs of a production process

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16
Q

What are the 4 factors of production

A

Land
Labour
Capital
Enterprise

17
Q

What are the 2 types of consumer goods

A

Durable goods and non durable goods

18
Q

What is the difference between wants and needs

A

Needs are necessary to survival, wants are those things that we desire, but can do without

19
Q

What are the 5 basic needs

A

Warmth, shelter, food, clothing and water

20
Q

What are resources

A

We refer to them as the factors of production

21
Q

What is an economy

A

A system that seeks to deal with the basic economic problem and allocate scarce resources

22
Q

What are the 3 main types of economic systems

A

The market economy / capitalist economy
The centrally-planned economy / command economy
The mixed economy

23
Q

What is the free market

A

Resources are allocated through the price mechanism without any government interference

24
Q

What is the centrally-planned economy

A

All resources belong to the state, there is no freedom of ownership, all factors of production owned by the state

25
Q

What is the mixed economy

A

A mix of the free market and centrally planned economy

26
Q

Define opportunity cost

A

The satisfaction lost from the next best alternative forgone

27
Q

What is a free good

A

A good that has no opportunity cost / doesn’t require a sacrifice

28
Q

What are economic goods

A

Goods that have an opportunity cost

29
Q

Define production possibility frontier (PPFs)

A

A diagram that illustrates the maximum amount of one good that can be produced given a certain amount of another good, when all resources are being fully and efficiently utilised.

30
Q

What is the area inside the PPF

A

Attainable and undesirable

31
Q

What is the area outside the PPF?

A

Desirable and unattainable

32
Q

What is a point on the PPF

A

Attainable and desirable

33
Q

Define specialisation

A

A situation where individuals or firms or regions or nations concentrate upon producing a small range goods and services

34
Q

Define division of labour

A

Occurs when the production process of a good or a service is divided into a number on individual operations and each operation is the special task of one worker

35
Q

How to work out labour productivity

A

Output per time period divided by number of employees per time period

36
Q

What are the advantages of division of labour?

A 
More efficient
No times wasted moving jobs
Saving time in training operatives
Makes possible a much greater use of machinery
Saving of skill
37
Q

What are the disadvantages of specialisation?

A

Monotonous tasks
Loss of craftsmanship
Workers are trained to do only one task
Interdependence

38
Q

What are the functions of money?

A

A medium of exchange
A store of value
A unit of account
A standard of deferred payment

39
Q

What are the characteristics of money

A 
Portable
Acceptable 
Durable
Divisible
Limited
Extremely difficult to forge/copy
Recognisable

Microeconomics (7 decks)

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