unit 1.8

Question 1

What is economics-

Answer 1

Economics is a social science, as it looks at the human behavior, to make decisions about how we use resource to provide our needs and want for the consumption of goods and services.

Question 2

What are the two branches of economics?

Answer 2

Micro focus on the economic behaviour of individuals and businesses, example individual markets. whilst macro looks at the economy from a wider perspective. Example global warming

Question 3

What is relative scarcity

Answer 3

Relative scarcity is the imbalance between people’s unlimited wants and needs and limited resources available to satisfy those wants and needs.

Question 4

What is an opportunity cost?

Answer 4

the value of production or consumption given up in one area, to allocated to the next best alternative.

Question 5

Difference between wants and needs

Answer 5

Wants are desires for goods and services we would like to have but do not need. Needs are something that is essential for survival such as

Question 6

What are resources?

Answer 6

are productive inputs including natural, labour and capital, that are used by firms to make or supply goods and services.

Question 7

Positive economics

Answer 7

Looks at issues that can be proven or disproven, ’fact based’ if prices go up the amount of things being bought will decrease.

Question 8

Normative economics

Answer 8

Are statements based on personal, opinion, likes and dislikes, ‘what ought to be’ example abortions should be banned

Question 9

Economic activity

Answer 9

Economic activity is a term used to describe the production process where firms use resources and convert them into the finished goods and services we need and want.

Question 10

Difference between material and non-material living standards

Answer 10

Material living standards refer to our access to physical goods and services Non-material living standards refer to the quality of our daily lives relating to crime rates and the environment.
Non-material living standards cannot be measured in dollar terms, and are intangible but affect our enjoyment of life.

Question 11

what can lead to increases or decreases in material living standards

Answer 11

the GDP can affect our material living standards as when the GDP increase. households are able to purchase more goods and services than they could before, therefore increasing their material living standards.

Question 12

3 Economic Questions

Answer 12

‘what and how much to produce’
‘how to produce’
‘for whom to produce’
Because of the basic economic problem of scarcity,

Question 13

Trade off

Answer 13

is an opportunity cost where when you achieve one goal, another suffers.

Question 14

A cost-benefit analysis

Answer 14

A cost-benefit analysis is a systematic process that businesses use to analyze which decisions to make and which to forgo.

Question 15

difference between short-term and long term cost benefit

Answer 15

The Short-run Cost is when a variable costs change with the output
Long run costs are accumulated when firms change production levels over time in response to expected economic profits or losses.

Question 16

PPF

Answer 16

production–possibility frontier
is a curve that illustrates variations of amounts that can be produced of two products if both depend upon the same finite resource to manufacture.

Question 17

in a PPF what would cause the business to shrink

Answer 17

When the mark is in inwards, it indicates that the economy is shrinking due to a failure to allocate resources at optimal production capability. it could also be a result of a decrease in supplies or a deficiency in technology.

Question 18

what does the flow model do?

Answer 18

The circular flow model demonstrates how money moves from producers to households and back again in an endless loop.

Question 19

GDP

Answer 19

GDP is the value of all final good and services produced within a country in one year
When all of these factors are totaled, the result is a nation’s gross domestic product (GDP).

Question 20

What are the four flows?

Answer 20

• the value of resources sold by household to business
• the value of incomes paid by business to households
• the value of good & services produced by business
• the value of good & services bought by the household (GDP)

Question 21

PPD

Answer 21

is a graph that shows all of the different combinations of output that can be produced given current resources and technology