the nature of economics - topic one Flashcards
What is the economic problem?
Unlimited wants but limited resources.
What are the four questions businesses must answer due to scarcity?
- What to produce?
- How much to produce?
- How to produce?
- How to distribute production?
What drives the need for choice by individuals and society?
Scarcity and the inability to have everything we want.
What is opportunity cost?
The cost of forgoing the next best alternative when making a decision.
What does a PPF graph show?
Various combinations of two alternative products that can be produced, illustrating opportunity cost.
What are consumer goods?
Items produced for immediate satisfaction of individual and community needs and wants.
What are capital goods?
Items produced not for immediate consumption but to produce other goods.
What happens if an individual spends all their paycheck now?
They won’t have any money for future needs and wants.
What is the implication of businesses investing money and saving?
They will have more money for the future to better their business.
What are the consequences for a government spending more than its budget on infrastructure?
Lower future spending budgets, higher debts, and possibly a budget deficit.
What factor influences individual decision-making regarding spending and saving?
Income increases lead to increased consumption.
How does education affect an individual’s income-earning capacity?
Higher education levels increase potential income.
What is the compulsory superannuation contribution by employers?
9.5% of employees’ gross wages.
How do highly paid professionals typically vote?
They might vote for a liberal party.
What is the primary aim of businesses regarding pricing?
To maximize profits by increasing revenues.
What accounts for about 70% of production costs?
Wages and salaries.
How does the government influence individual and business decisions?
By taxing and allocating resources for infrastructure and services.
Fill in the blank: A higher level of education leads to a higher potential _______.
income.
True or False: Lowering disposable income does not influence retirement decision-making.
False.
