Unit 1 And 2

Question 1

Capitalism

Answer 1

Institution where main ones are private property, markets and firms

Question 2

Institution

Answer 2

Laws and social norms that govern the production and distribution of goods and services

Question 3

Market

Answer 3

Way for people to exchange goods or services for mutual benefit

Question 4

Private property

Answer 4

Ownership rights over possessions

Question 5

Firms

Answer 5

Business organisation that turns inputs into outputs and sells them for proce to at least cover production costs

Question 6

Absolute advantage

Answer 6

Firm/country can produce using fewer factors of production than other firm/country

Question 7

Comparative advantage

Answer 7

Country or firm can specialise in producing good or service at lowest opportunity cost - then trade with other countries or firms

Question 8

Isocost line

Answer 8

Combination of inputs that that give the same cost

Question 9

Innovation rent

Answer 9

Fall in cost = rise in profit

Question 10

Economic rent

Answer 10

Extra amount of money earns that exceeds what is economically necessary

Question 11

Incentives

Answer 11

Economic reward / punishment which influence the benefits and costs of alternate courses of action