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Economics > Topic 1 - Introduction to Economics > Flashcards

Topic 1 - Introduction to Economics Flashcards

1
Q

What is Economics?

A

Economics is the study of factors affecting the production, consumption, and distribution of goods and services involving individuals, businesses, and government.

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2
Q

What are goods?

A

Tangible products - e.g. a pencil case

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3
Q

What are services?

A

Intangible products - e.g. a haircut

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4
Q

What are wants?

A

Consumers desiring a product that is not necessarily required for survival. (Basic goods and services)

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5
Q

What are needs?

A

Consumers purchasing basic goods and services that are required for general living purposes.

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6
Q

What is Scarcity?

A

A short supply

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7
Q

What is the economic problem?

A

Unlimited wants with limited resource.

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8
Q

What are the factors of production?

A

Resources used to produce goods and services that are wanted and needed by consumers.

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9
Q

The 4 factors of production are…

A

Land, Labour, Capital, Entrepreneurs

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10
Q

What is LAND?

A

Natural resources produced to make various goods and services
Income return for owners: RENT

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11
Q

What is LABOUR?

A

Human labour is utilised to produce goods and services

Income return for owners: WAGES

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12
Q

What is CAPITAL?

A

Equipment used to produce other goods and services

Income return for owners: INTEREST

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13
Q

What is ENTREPRENEURSHIP?

A

Taking risk in utilising the other factors of production for business ventures
Income return for owners: PROFIT

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14
Q

These factors of production are bought and sold in the Factor Market … what is the factor market?

A

Physical or non-physical place where any good and services are bought and sold

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15
Q

What opportunity cost?

A

Occurs when whenever a decision or choice is made.

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16
Q

Why does opportunity cost exist?

A

Scarcity - Finite resources to fulfill infinite wants and needs - requires a DECISION and CHOICE to be made

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17
Q

What should be produced?

A

Dependent on the market

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18
Q

How much should be produced?

A

Dependent on consumer demand

19
Q

How should it be produced?

A

Dependent on resources availability

20
Q

Who should it be distributed to

A

Dependent on individuals income

21
Q

Despite taking theses factors into account, opportunity cost of the forgone alternative will still exist - For an economy, this can be drawn out as the PPF..
What is the PPF

A

Maximum production potential of the economy with given, fixed or finite level of resources.

22
Q

The PPF shows the opportunity cost of each possible production level.
The formula for calculating the cost is …

A

Opportunity cost =
what is given up
————————–
what is gained

23
Q

Distribution of goods and services in the economy

A

The level of income is influenced by the individual’s level of education, employment, occupation and productivity

24
Q

What is ‘employment’ ?

A

Employment refers to individuals that are engaged in paid work

25
Q

What is ‘unemployment’ ?

A

Unemployment refers to individuals that are actively seeking for work

26
Q

Employment in Aus is created in the…

A

Private sector and public sector

27
Q

What are the three main industries of employment ?

A

Primary industry, secondary industry, tertiary industry

28
Q

What is the primary industry?

A

Businesses selling raw materials such as agriculture and mining products

29
Q

What is the secondary industry?

A

Businesses involved in manufacturing or uses raw materials to create finished goods

30
Q

What is the tertiary industry?

A

Businesses that distribute or sell quinary and quaternary goods and services

31
Q

Quality of Life ?

A

standard indicators of the QoL include wealth, employment, environment, physical and mental health, education , work status and many others

32
Q

What is Tax revenue?

A

Tax revenue is for the government which is used to provide public goods and services such as healthcare and education

33
Q

Employment and QoL will also be influenced by the business cycle …

A

The business cycle represents the general volatility and fluctuating movements of the economy

34
Q

What is ‘GDP’ ?

A

‘GDP’= GROSS DOMESTIC PRODUCT
measures total production of goods and services in the domestic economy
Used as a measurement of ‘ economic growth’

35
Q

4 PHASES OF A BUSINESS CYCLE?

A

Trough, expansion, peak, contraction

36
Q

4 PHASES OF A ECONOMIC CYCLE?

A

Low, increasing, high, decreasing

37
Q

What is the circular flow of income?

A

The economy is a continuous cycle, it operation is built upon the inter-relationships of various economic sectors; they include household sector, business sector, finance sector, government sector, and international sector

38
Q

PLEASE REFER BACK TO PPT 6 TO SEE HOW ALL SECTORS CAN WORK.

A

…….

39
Q

What is the equilibrium?

A

Equilibrium is the state in which market supply and demand balance each other, and as a result prices become stable. Generally, an over-supply of goods or services causes prices to go down, which results in higher demand—while an under-supply or shortage causes prices to go up resulting in less demand.

40
Q

Leakages are

A

Savings
Taxation
M-imports
‘leakage’ meaning they take out the money out of the economy

41
Q

Injections are

A

Investments
Gov spending
X exports
‘Injections; meaning that they bring money into the economy

42
Q

When the value of leakages and injections are equal to each other, the economy is said to be in EQUILIBIRIUM; This means..

A

S+T+M = I +G+X

43
Q

When S+T+M is greater than I+G+X….

A

The economy is contracting and there is DISEQUILIBRIUM

  • Households will receive less income
  • Households will reduce spending
  • Households pay less tax and buy less importas
44
Q

When S+T+M is less then I+G+X…

A

The economy is expanding and there is DISEQUILIBRIUM

  • Households will receive more income
  • Households will increase spending
  • Households will pay more tax and buy more import

Economics (6 decks)

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