Unit 1 Flashcards
Need
need is something that you require to survive such as water, food and shelter
Want
Is something you desire to have eg pet
Factors of production
Land - natural resources eg oil
Labour - work force eg workers
Capital - machinery e.g machines
Enterprise - entrepreneur who combines factors of production
Oppertunity cost
The next best alternative choice eg you have a £1 you can either spend it on a twix or a mars bar. If you choose the mars bar the twix is the oppertunity cost
Oppertunity coast for :
Induviduals
Firms
Government
Induviduals - to maximise their utility, with limited income, therefore they need to decide how yo spend the limited income to maximize utility eg laptop or computer
Firm - aim is to maximize profit, with limited resources, therefore they need to decide what to produces to maximize Profit. Eg iPad or tablet
Government - aim to maximize public welfare, with limited tax revenue, therefore they need to decide what goods and services to provide to maximize public welfare eg spend on school or hospitals
Wages
a fixed regular payment earned for work or services, typically paid on a daily or weekly basis.
Salaries
fixed regular payment, typically paid on a monthly basis but often expressed as an annual sum.
State benefits
State Benefits are sums of money paid by the Government to people in certain circumstances to meet their day to day living needs.
Tax credits
Child Tax Credit is available to people responsible for a child or young person, who have income below a certain amount.
Working Tax Credit is a payment to top up earnings of people working on low incomes, including those that do not have children.
Pensions
is just a tax-free pot of cash you, your employer (and sometimes the Government) pays into, as a way of saving up for your retirement.
Investments
An asset or item that is purchased with the hope that it will generate income or appreciate in the future.
Disposable income
Income left after taxes have been deducted
Discretetionary income
Income left over after taxes and essential bills (e.g. mortgage) have been deducted
Ways of saving
Cash ISAs (Individual Savings Accounts) - an account that pays interest tax-free. The benefit is that you earn interest tax-free un to a certain limit.
• Instant access savings accounts - A savings account that a customer can make withdrawals from at any time. Allows access at anytime, not locked in for a period of time.
