unit 1

Question 1

what is the basic economic problem

Answer 1

human wants and needs are limitless but resources are scarce

Question 1

define economics

Answer 1

a social science that studies how economic stakeholders interact, behave and use scarce resources

Question 2

what is an economic stakeholder

Answer 2

anyone that impacts or is impacted by economic decisions and activities

Question 3

list the six economic stakeholders

Answer 3

1. consumers/individuals
2. producers/firms
3. labours/workers
4. government
5. environment
6. community

Question 4

define ‘opportunity cost’

Answer 4

the value or benefit of the next best alternative foregone

Question 5

what is the main opportunity cost of a consumer

Answer 5

opportunity cost arises when consumers make choices on what goods and services to purchase and consume

Question 6

what is the main opportunity cost of a producer

Answer 6

opportunity cost arises when producers make choices on what goods and services to produce and how to produce them

Question 7

what is the main opportunity cost of a worker

Answer 7

opportunity cost arises for workers when they make choices on what they want to work as and who they want to work for

Question 8

what is the main opportunity cost of the government

Answer 8

opportunity cost arises for the government when they make choices on the policies they make and what to spend on public expenditure

Question 9

list the factors of production

Answer 9

1. land
2. labour
3. capital
4. enterprise

Question 10

what does ‘land’ refer to

Answer 10

all natural resources

Question 11

give some examples of ‘land’

Answer 11

oil, coal, sand, stone, fossil fuels, minerals, fields, soils, seas, lakes, oceans, rivers, sunlight, air, forestry, plants, animals, etc

Question 12

what does ‘labour’ refer to

Answer 12

all human resources

Question 13

give some examples of ‘labour’

Answer 13

knowledge, skills, experience and expertise of a worker

(teachers, doctors, scientists, chef, nurse, waiter, cashier)

Question 14

what does ‘capital’ refer to

Answer 14

man made resources used to aid in the production of other goods and services

Question 15

give examples of ‘capital’

Answer 15

machinery, tools, equipment, vehicles, factories, buildings, roads, railways etc

Question 16

define enterprise

Answer 16

the willingness and ability to take on the risk and reward when combining the factors of production to produce goods and services

Question 17

give examples of ‘enterprise’

Answer 17

sole traders, partnerships, public limited companies, private limited companies, non-profit organisations etc

Question 18

list the factor rewards

Answer 18

1. land - rent
2. labour - wages
3. capital - intrest
4. enterprise - profit

Question 19

define ‘free goods’

Answer 19

goods with no opportunity cost

Question 20

give some examples of ‘free goods’

Answer 20

water, air, sunlight

Question 21

define ‘economic goods’

Answer 21

goods with opportunity cost

Question 22

define ‘consumer goods’

Answer 22

goods used and consumed by consumers

Question 23

define ‘capital goods’

Answer 23

goods used by firms to produce other goods and services

Question 24

define 'private goods'

Answer 24

goods that can be excludable and rivalrous

Question 25

define 'public goods'

Answer 25

goods that are non-excludable and non-rivalrous

Question 26

define 'merit goods'

Answer 26

goods that have benefits, have positive externalities, and are usually under-consumed and underproduced in a free market

Question 27

give examples of merit goods

Answer 27

education, healthcare, waste disposal services

Question 28

give some examples of public goods

Answer 28

street lamps, lighthouse, national defence

Question 29

define 'demerit goods'

Answer 29

goods that are harmful, have negative externalities, and are usually over-consumed and overproduced in a free market.

Question 30

give some examples of demerit goods

Answer 30

cigarettes, alcohol, junk food

Question 31

what are the classification of goods and services

Answer 31

free goods and economic goods

Question 32

what are the two types of factor mobilty

Answer 32

occupational mobility and geographical mobility

Question 33

define 'occupational mobility'

Answer 33

the degree to which a factor of production can change its USE

Question 34

define 'geographical mobility'

Answer 34

the degree to which a factor of production can change its LOCATION

Question 35

what is a production possibility curve (PPC)

Answer 35

a curve that shows the MAXIMUM OUTPUT of TWO types of products and the COMBINATION of those products that can be produced with EXISTING RESOURCES and TECHNOLOGY

Question 36

how occupationally mobile is land

Answer 36

mostly mobile

Question 37

how occupationally mobile is labour

Answer 37

it depends on several factors

Question 38

how occupationally mobile is capital

Answer 38

it depends on the type of capital

Question 39

how occupationally mobile is enterprise

Answer 39

the most mobile

Question 40

how geographically mobile is land

Answer 40

mostly immobile

Question 41

how geographically mobile is labour

Answer 41

it depends on several factors

Question 42

how geographically mobile is capital

Answer 42

it depends on the type of capital

Question 43

how geographically mobile is enterprise

Answer 43

the most mobile

Question 44

give some examples of how land is occupationally mobile

Answer 44

- forestry can be used to produce paper, rubber, wooden furniture, wood tables, wood chairs - cows can be used to produce dairy products (milk, cheese, etc) leather, instruments, meat, a mode of transport and fertilisers from it's waste

Question 45

give some examples of how labour is occupationally mobile

Answer 45

it depends on a person's knowledge, experience, expertise, qualification and skills - a doctor can also be a check if they know how to cook well (the knowledge, experience, qualification) - a lawyer cannot be a chef if they don't know how to cook well (the knowledge, experience, qualification)

Question 46

give some examples of how capital is occupationally mobile

Answer 46

- an oven can be used to bake pizza in a restaurant or cakes at a bakery - a road can only be used for travelling on.

Question 47

give some examples of how enterprise is occupationally mobile

Answer 47

a sole proprietor should be able to produce a vast variety of goods and services.

Question 48

give some examples of how land is geographically mobile

Answer 48

- the sun, oceans, river, lakes, mountains cannot be moved - a cow or horse can easily be moved

Question 49

give some examples of how labour is geographically mobile

Answer 49

it depends on: - transport, family obligation, housing, ability to gain work visas etc

Question 50

give some examples of how capital is geographically mobile

Answer 50

- an oven can be moved easily - vehicles can be moved easily - a building cannot be moved easily - roads cannot be moved easily

Question 51

give some examples of how enterprise is geographically mobile

Answer 51

a sole proprietor should be willing and able to move from one part of the city/country to another to run their business.

Question 52

what does PPC stand for

Answer 52

production possibility curve

Question 53

define the term 'shift outwards'

Answer 53

a PPC will shift outwards if there is an increase in the quantity or quality of factors of production in the economy

Question 54

define the term 'shift inwards'

Answer 54

a PPC will shift inwards if there is a reduction in the quantity or quality of factors of production in the economy

Question 55

define the term 'pivot outwards'

Answer 55

a PPC will pivot outwards if there is an increase in the quantity or quality of factors of production for a specific or particular sector/industry/product in the economy

Question 56

define the term 'pivot inwards'

Answer 56

a PPC will pivot inwards if there is a reduction in the quantity or quality of factors of production for a specific or particular sector/industry/product in the economy