Topic 1: What is Economics Test Revision Flashcards
Land resources
Resources found in nature and that can be used in the production process to generate more elaborate products or consumed in their raw form
Labour resources
The mental and physical effort exerted by humans in the production process
Capital resources
Refers to those resources that have been made by combining labour and natural resources to create a more sophisticated input in the production process (eg. Machinery)
Enterprise resources
The skills of those individuals who combine our resources to produce goods and services.
Define a ‘Need’
Essential goods and services that humans need in order to achieve a basic standard of living
Define a ‘Collective want’
To satisfy the needs of society as a whole. For example libraries and roads
Define a ‘Want’
Provide us with a level of satisfaction and helps support the lifestyle or standard of living that we aspire to
Define ‘Individual wants’
To satisfy the personal desires of individuals
Define ‘Complementary wants’
Two goods that a consumer uses together. For example a car and fuel
Define a ‘Good’
Physical items of value that are traded (eg: cars, milk, iPhones)
Define a ‘Service’
Non-physical items of value that are traded, eg: education, haircuts, healthcare
Define ‘Economics’
The social study of how people and society choose to use limited resources to fufill their needs and unlimited wants
Define ‘Opportunity cost’
What you have to forgo if you choose to do A rather than B; the value of the alternative that is foregone whenever a choice is made
What is a Productivity Possibility Curve
A tool used by economists to show how opportunity costs arise when individuals or the community make choices. It is often used to demonstrate the concept of opportunity cost
Define and describe the use of ‘Factors of Production’
Used to produce goods and services that satisfy needs and wants. The 4 economic resources are land, labour, capital and enterprise
Define ‘Consumer Goods’
Items produced for the immediate satisfaction of individual and community needs and wants
Define ‘Capital goods’
Items that have not been produced for immediate consumption but will be used for the production of other goods
What is the ‘Economic problem’ ?
The economic problem is scarcity - Having unlimited needs and wants, but limited resources that can be used to achieve them
Define ‘Economic growth’
The increase in the quantity of goods and services produced in an economy over a period of time
Define ‘Sustainable development
Development that meets the needs of the present without compromising the ability of future generations to meet their own needs. Sustainable development values resources for their future and current uses
Define a ‘Reoccuring want’
Wants that are never satisfied and keep recurring
Define ‘Inflation’
When the general price level of prices paid for goods and services increases over a certain period of time
Define ‘Unemployment’
The percentage of people who are in the labour force who are unemployed
Define ‘Interest rates’
The amount a borrower must pay a lender for the use of assets such as money. Usually expressed as a percentage of the total amount borrowed
Define ‘Externalities’
The costs or the benefits received by a third party, where the third party does not have control over the costs or benefits.
Distinguish the difference between ‘A good’ and a ‘Service’
A good is a tangible or physical product that someone will buy, a service is when you pay for a skill. A service is intangible, which can’t be physically touched or stored.
Define a ‘Monteray cost’
Monetary cost is a easily measurable financial costs. Any cost associated with the production of goods and services; rents, taxes, utilities, gas.
Define a ‘Non- Monetary cost’
Non-monetary costs are the things that cost you personally, but not your bank account. Non-monetary costs are measured in units other than money. These costs could be time, convenience, or even effort.
Define a ‘Positive externality’
When consuming or producing a good causes benefit to a third party
Define a ‘Negative externality’
When consuming or producing a good causes a cost to a third party
Define ‘Utility’
Utility = Benefit, satisfaction or value
Define ‘Marginal’
Marginal = Incremental or additional
Define ‘Marginal utility’
Marginal utility = The incremental satisfaction derived from each additional product consumed
Define and explain the use of a ‘CBA’
It is a technique that attempts to set out and evaluate the social costs and benefits of an investment project
