The economic problem Flashcards

0
Q

What are the factors of production

A

Land, labour, capital and enterprise

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1
Q

Define the economic problem

A

Unlimited wants and scarce resources mean no society can produce sufficient products to satisfy everyones desires

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2
Q

Define the factors of production

A

Types of resource inputs used to produce goods and services

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3
Q

Define specialisation

A

When workers, firms, regions or economies concentrate on the production of a narrow range of goods and services

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4
Q

Define land

A

All natural resources including fields, mineral wealth, and fishing stocks

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5
Q

Define labour

A

Human resources, the physical and mental work of people whether by hand, by brain, skilled or unskilled

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6
Q

Define enterprise

A

The willingness to take business risks and organise production

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7
Q

Define capital

A

Man made goods used to produce more products eg factories, machines, offices and roads

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8
Q

Define scarcity

A

A situation where there are insufficient resources to create all products needed to meet all of our wants

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9
Q

Define opportunity cost

A

The benefits foregone of the next best alternative

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10
Q

Define choice

A

The selection of one option between alternatives

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11
Q

Define competition

A

When rival firms contend for customers

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12
Q

What is a barter

A

The direct exchange of products for other products without the use of money

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13
Q

Cerberus Paribus

A

A Latin phrase meaning ‘all other things being equal’

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14
Q

Define Consumer

A

An individual who buys and uses a product

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15
Q

What does consumer sovereignty mean

A

Buyers ultimately determine what is produced and how scare resources are used by means of their purchases

16
Q

Define consumer taste

A

The preferences of households

17
Q

Define commodities

A

Primary products such as gold, oil, wheat or rubber

18
Q

Define capacity

A

The maximum output a firm or country can produce given its current resources

19
Q

Economic efficiency

A

Market is both allocative and productively efficient

20
Q

Pareto efficiency

A

No real allocation of resources can make an individual better off without making another individual worse off