Unit A Nature and principles of Economics

Question 1

Economy

Answer 1

Structure of economic life in a country, area or period

Question 2

Economics

Answer 2

Economics is the study of choices people make to satisfy their wants and needs with a limited supply of resources

Question 3

Microeconomics

Answer 3

Examines how individual buyers and sellers interact

Question 4

Macroeconomics

Answer 4

A broader view of the economy from a national perspective

Question 5

The basic economic problem

Answer 5

The fundamental economic problem is the issue of scarcity and how best to produce and distribute these scarce resources

Question 6

Scarcity

Answer 6

A demand for a good or service is greater than the availability of the good or service

Question 7

The basic economic questions

Answer 7

1. What should be produced
2. How will it be produced
3. Who will use/buy it

Question 8

Choice

Answer 8

Refers to the ability of a consumer or producer to decide which good, service or resource to purchase or provide from a range of possible options

Question 9

Opportunity cost

Answer 9

What must be given up in order to obtain something else.

Question 10

Goods

Answer 10

An output of the economic system. Goods are tangible objects sold to customers. Eg. Clothing, cars

Question 11

Services

Answer 11

An output of the economic system. Services are tasks performed for the benefit of the recipients. Eg. Legal advice, house cleaning

Question 12

Production

Answer 12

Is the process of combining various inputs, both material (such as metal, wood) and immaterial (such as plans, knowledge) in order to create an output.

Question 13

Production possibility curve (PPC)

Answer 13

A model that represents all of the different combinations of two goods that can be produced. Captures scarcity of resources and opportunity cost.

Question 14

Consumption

Answer 14

Is the act of using resources to satisfy current needs and wants

Question 15

Economic agents

Answer 15

Are consumers, produces and/or influencers of capital markets in the economy at large.

Question 16

Nudge

Answer 16

“ non enforced compliance” Ways to influence the behaviour and decision making of groups and individuals without taking their other opinions away

Question 17

Non-market production

Answer 17

Covers the goods and services household members produce for their own consumption by combining their unpaid labour and the goods and services they acquire on the market.

Question 18

Four Factors of production.

Answer 18

In economics, the four factors of production, are the resources used to create goods and services. Natural resources, human capital, capital goods, entrepreneurship

Question 19

Natural resources

Answer 19

One of the four factors of production. Refers to all natural resources such as minerals, forests, and water.

Question 20

Human capital

Answer 20

Refers to the effort and skills of people who work to produce goods and services, labour.

Question 21

Capital goods

Answer 21

Refers to the tools, machinery and other physical assets used to produce goods and services

Question 22

Entrepreneurship

Answer 22

Entrepreneurship combines the other factors of production, land, labour and capital to make a profit. They identify opportunities, organise resources and bring new products or services to the market.