Unit 1 - The basic economic problem

Question 1

Economic problem (DEFINE)

Answer 1

• Unlimited wants exceeding finite resources

Question 2

Resources are…

Answer 2

scarce, limited

• factors used to produce g+s

Question 3

Scarcity)

Answer 3

A situation where there is not enough to satisfy everyone’s wants

Question 4

Free goods (DEFINE)

Answer 4

• A product which does not require any resources to make and so does ont have an opportunity cost

example : water in river, sunshine, air.

Question 5

Economic goods (DEFINE)

Answer 5

• A product which requires resources to produce and therefore has an oppportunity cost

Question 6

Factors of production (4)

Answer 6

The economic resources of
- Capital
- Enterprise
- Land
- Labour

Question 7

Land (DEFINE)

Answer 7

Gifts of nature available for production

Question 8

Labour (DEFINE)

Answer 8

Human effort used in producing goods and services

Question 9

Capital /(goods) (DEFINE)

Answer 9

Human-made goods used in production

Question 10

Consumer goods (DEFINE)

Answer 10

Goods and services purchased by households for their own satisfaction

Question 11

Enterprise (DEFINE)

Answer 11

Risk bearing and key decision making in business

Question 12

Mobility of the FoP (2)

Answer 12

• Occupational mobility
• Geographical mobility

Question 13

Mobility of labour (Reasons)

Answer 13

• Differences in price/availability of housing in different areas
• Family ties
• Differences in educational systems
• Lack of information
• Restrictions on movement of workers

Question 14

Occupational mobility (DEFINE)

Answer 14

Capability of changing use

Question 15

Geographical mobility (DEFINE)

Answer 15

Capability of moving from one location to another location

Question 16

Mobility of labour (DEFINE)

Answer 16

Ability of labour to change where it works or in which occupation

Question 17

Mobility of capital (DEFINE)

Answer 17

Ability to change where capital is used or in which occupation

Question 18

Mobility of enterprise (DEFINE)

Answer 18

Ability to change where enterprise ise used or in which occupation

Question 19

Entrepeneur (DEFINE)

Answer 19

A person who bears the risk and makes the key decisions in a business

Question 20

Labour force (DEFINE)

Answer 20

People in work and those actively seeking work

Question 21

Productivity (DEFINE)

Answer 21

The output per factor of production in an hour

Question 22

Labour productivity (DEFINE)

Answer 22

Output per worker hour

Question 23

Output (DEFINE)

Answer 23

Goods and services produced by the factors of production

Question 24

Quantity of labour determinants (5)

Answer 24

• Size of population
• Age structure of population
• Retirement age
• School leaving age
• Attitude to working women

Question 25

Investments (DEFINE)

Answer 25

Spendings on capital goods

Question 26

Gross investment (DEFINE)

Answer 26

Total spending on capital goods

Question 27

Depreciation (captial consumption) (DEFINE)

Answer 27

Value of capital goods that have worn out or become obsolete

Question 28

Net investment

Answer 28

Gross investment minus depreciation

Question 29

Opportunity cost

Answer 29

Next best alternative foregone to satisfy the other

Question 30

PPC

Answer 30

• Production Possibility Curve

Maximum combination of two goods that can be produced with available resources