theme 1

Question 1

total utility

Answer 1

the total satisfaction from a given level of consumption.

Question 2

4 economic agents

Answer 2

Goverment,Consumers,Firms and employees

Question 3

price elasticity of demand

Answer 3

% change in quantity demanded
————————————————
% change in price

Question 4

price elasticity of supply

Answer 4

% change in supply
—————————
% change in price

Question 5

income elasticity of demand (YED)

Answer 5

% change in demand
——————————
% change in income

Question 6

Cross elasticity (XED)

Answer 6

% change in quantity demanded of good A. negative value = compliment
———————————————————— = positive value = substitute
% change in price of good B. higher the value the stronger the relationship

Question 7

how do you tell if it’s elastic or inelastic?

Answer 7

if answer between 0 and -1 relationship is inelastic
if answer is between 0 and ♾️ relationship is elastic

Question 8

normal good?

Answer 8

demand rises as income rises and visa versa (positive value)

Question 9

inferior good?

Answer 9

demand falls as income rises and vise vesa (negative)

Question 10

luxury good

Answer 10

a posotive value of +1

Question 11

why does supply curve shift

Answer 11

cost of production,
government taxes,
natural factors,
technology.

Question 12

why does demand curve shift?

Answer 12

taste and fashion,
change in the price of complimentary goods,
income,
advertising,
population,
change in price of substitute goods.

Question 13

ceteris paribus

Answer 13

the effect of economic variable on another.You do one thing what happens next…

Question 14

normative statement

Answer 14

they are subjected to opinions also known as valued judgements. “I think,you might,you should”.

Question 15

posotive statements

Answer 15

objective statements that can be tested.

Question 16

price mechanism

Answer 16

the interaction between buyers and sellers in free markets. relative prices show the forces of demand and suppy.

Question 17

Rational function

Answer 17

rations who can afford it, if price rise. Also rations the allocation of resources because they wont supply as much.

Question 18

signalling function

Answer 18

rising prices give the consumer a signal to reduce demand. However producers will be signalled to supply more.

Question 19

incentive funtion

Answer 19

higher prices give the incentive for producers to supply more because consumers follow a trend and want more.

Question 20

public goods

Answer 20

goods supplied by government when market failure occurs

Question 21

quasi-public good

Answer 21

a near public good. it is semi non rival as well as semi non excludable

Question 22

non excludablity

Answer 22

the benefits derived from pure public goods cannot be confined to those who payed for it . Therefore leading to the free rider problem

Question 23

non rival consumption

Answer 23

consumption by one consumer does not restrict consumption by other consumers. if it is supplied to one, it is supplied to all

Question 24

non rejetable

Answer 24

it can not be rejected by others eg: nuclear defence and flood defence

Question 25

Asymmetrical information

Answer 25

a type of market failure where one individual or party has the knowledge. they can then exploit the other party. For markets to work you need symmetric information.

Question 26

PPF

Answer 26

a PPF shows maximum possible output combinations of two goods or services a economy can achieve when resources are fully employed. are effected by the 4 factors of production. and can shift to left if they loose factors or to the right if factors increase.

Question 27

division of labour

Answer 27

splits the workplace in specific roles for example a person on fish and a person on garnish. This happens so the job doesn’t become confusing and is more efficient.

Question 28

comparitive advantage

Answer 28

being able to produce something at a much lower opportunity cost.

Question 29

absolute advantage

Answer 29

being able to produce more of something than another country

Question 30

karl marx

Answer 30

belived that it was a better idea sharing wealth fairly as workers get payed less(communism).

Question 31

adam smith

Answer 31

trade leaves us all better off,rish leads to reward, everybody persues intrests.

Question 32

hayek

Answer 32

no government intervention because only buyers and sellers understand the market

Question 33

centralised economic

Answer 33

reasources allocated by government

Question 34

free market economies

Answer 34

market looks after itself

Question 35

mixed economies

Answer 35

free market with some legastation

Question 36

traditional economies

Answer 36

subsistenc farming and localised trade

Question 37

positive externalities

Answer 37

a product which has a positive impact on third party

Question 38

negative externality

Answer 38

a product which has a negative effect on a third party

Question 39

subsidies

Answer 39

direct payments that governments provide to businesses to offset operating costs

Question 40

carbon trading

Answer 40

is a system limiting carbon emissions through granting firms permits to emit a certain amount of carbon. firms can trade these if not used but have to pay if the firm goes over