theme 1 factors and pro and cons Flashcards
1
Q
pros of specialisation (3)
A
- adam smith labour productivity increases
- higher quality goods
- time is not wasted,trained to do one task
2
Q
con of specialisation
A
- bored people make poor quality work, so reduces craftsmanship
- lack of industrial training causes structural unemployment
- one delay causes all delay
3
Q
pro and con of specialisation in trade
A
- comparative advantage, increases world output
- overdependent due to high interdependence
4
Q
functions of money (4)
A
a medium of exchange
a measure of value
a store of value
a method of deferred payment
5
Q
free market pro
A
- automatic (invisible hand)
- consumer sovereignty, high motivation and political freedom
- productive efficiency, firms are in competition
6
Q
free market con
A
- higher inequality
- lack of merit good, too much demerit good (externalities)
- monopolies and unproductive expenses
7
Q
command economy pro
A
- minimum standard of living and standardised products
- less wastage of resources and long term planning
8
Q
command economy con
A
- imperfect information of government
- bribery and corruption
- les motivation and efficiency by firms due to loss of freedom
9
Q
role of government in mixed economy
A
- frame work of rules
- supplement and limit goods
- redistribute incomes
10
Q
factors shifting demand
A
PIRATES
11
Q
factors of PED
A
- available substitutes
- time (to change)
- necessity
- % of total expenditure
- addicitive
12
Q
factors affecting supply
A
- cost of production
- price of other goods
- technology
- legislation
- taxes and subsidies
- producer cartels
13
Q
factors affecting PES
A
- time
- stockpile of goods
- working below full capacity
- availability of FOP
- availability of substitutes
- ease into entry of market
14
Q
role of price mechanism
A
- the rationing function
- the signalling function
- the incentive function
15
Q
3 types of market failure
A
- externalities
- under provision of public goods
- information gaps
