Topic 1 Flashcards
What is scarcity
Lack of resources
Examples of enterprise
Investment
Examples of land
Rent / where raw material come from
What causes a PPf curve to shift to the right
Increase in factors of production
Cerebus parabus
All contributing factors being equal
Subsidies
When the government help a product or business by funding it more
Inelastic good
Price wont affect demand
Price elastic
Price will affect demand
Cross elasticity of demand
Responsivesnes of demand on one good and how it affects the price of another good
Party season near Christmas meaning
Positive for substitutes, negative for complimentarys
Examples of complimentary goods
Toothpaste and tooth brush, football boots and football, petrol and car
Examples of substitute goods
Coffee and tea, coke and Pepsi
What does RATNEST mean in terms of supply shift moving
Resource cost,alternative outsource price, tech , number of suppliers, expected future price , subsidies , taxes
What does SEPTIC mean in terms of demand curve shifting
Subsidy goods , expected future price , population , taste / fashion , income , complimentary good
How do you tell if a product is perfectly elastic on a graph
Straight horizontal line
How do you tell a product is perfectly in elastic on a graph
A vertical straight line
What is the promblem with merit goods
They are underproduced and under used
What is the problem with demerit good
Over produced and over used
What is market failure
Missalocation of resources
Why is the price ceiling always below equilibrium
It will shift demand making price stay reasonable, use on merit goods
True or false price floor is used on demerit goods
True
What is joint demand
The demand for one good leads to the demand for another
Composite demand
The demand for a good that has multiple purpose
Joint supply
When the supply for one good automatically leads to the supply for another good
Examples of composite demand
Milk used for all sorts of foods
Examples of joint demand
Substitute goods
Derived demand
Cafes in tourist attraction
Examples of joint supply
Cow beef leather
What is the productivity gap
The difference between labour productivity
What is labour productivity
Output per worker
Capital productivity
Output per unit of capital
What is a firm
A productive organisation which sells its output of goods
What is specialisation
A worker only performing one task or a narrow range of tasks
What is division of labour
Different workers perform different tasks in the course of producing a good or service
What is marginal returns of labour
The change in the quantity of total output resulting from the employment of one more worker, holding all the other factors of production fixed.
Law of diminishing marginal returns
A short-term law which states that as a variable factor of production is added to a fixed factor of production,both the marginal and eventually the average returns to the variable factor will begin to fall
What does total returns mean
The whole output produced by all the factors of production,including labour , employed by a firm
Average returns of labour
Total output divided by the total number of workers employed
What is increasing return to scale
When the scale of all the factors of production employed increases,output increases at a faster rate
Constant returns to scale
When the scale of all the factors of production employed increases,output increases at the same rate
