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higher economics 2023 > unit one > Flashcards

unit one Flashcards

1
Q

define scarcity

A
  • the problem of finite resources and infinite wants
  • it is a universal problem
  • it is permanent
  • Can be shown on a PPC curve
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2
Q

define choice

A
  • it is a universal problem
  • consumers wish to maximise utility
    -firms wish to maximise profit
  • government wishes to maximise welfare
  • Can be shown on a PPC curve
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3
Q

define opportunity cost

A
  • the next best option forgone when an economic decision is made
  • can be shown on a PPC curve
  • shows the sacrifice of one good for increased production of another
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4
Q

define economic goods

A
  • they have a monetary value
  • their production has an impact on the environment
  • they are made from finite resources
  • eg, TV
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5
Q

define shortage

A
  • when demand is greater than supply
  • eg, a famine
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6
Q

define free goods

A
  • they have no price
  • they do not use up scarce resources
  • they are abundant in supply
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7
Q

define public goods

A
  • they have positive exernalities
  • when one person consumes it doesnt reduce the amount others can consume
  • they benefit all of society
  • government subsidises these as it increases public welfare
  • eg, education, NHS
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8
Q

define merit goods

A
  • they are under consumed by the market
  • government subsidises these as they wish to increase consumption of these
  • they have positive externalities
  • eg, education, public transport
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9
Q

define demerit goods

A
  • they are over consumed by the market
  • government taxes/bans these as they wish to decrease consumption of these
  • they have negitive externalities
  • eg, Class A drugs
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10
Q

what can be shown by a PPC curve

A
  • opportunity cost
  • scarcity
  • choice
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11
Q

define PED

A
  • PED is a measure of responsiveness of demand after a change in price
  • PED = % change in quantity demanded DIVIDED BY % change in price
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12
Q

what are the factors that influence PED

A
  • addictiveness
  • closeness of substitutes
  • necessity or luxury
  • income
  • utility
  • loss of value over time
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13
Q

define demand

A

the quantity of a good or service that consumers are willing and able to purchase at a given point of time.

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14
Q

what is diminishing marginal utility

A
  • as the jumber of units increases, utility also decreases
  • eg increased income becomes less useful beyond a point
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15
Q

what is a veblen demand curve

A
  • c shape
  • snob effect
  • status or quality
  • eg rolex watch
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16
Q

what is a giffen curve

A
  • > shape
  • essential goods
  • people will reduce consumption of other goods or services to increase consumption of these
  • eg potatoes in the irish potato famine
17
Q

define total utility

A

measurement of total satisfaction an individual recieves from a specific amount of a good/service

18
Q

define marginal utility

A

measurement of the satisfaction an individual recieves from consuming one additional unit or a good or service

19
Q

define speculation

A

When individuals make decisions about buying or selling depending on expectations on future prices eg, Stock exchange

20
Q

what are the determinants of demand

A
  • tastes
  • season
  • price of other goods
  • income
  • population size
  • advertising
  • closeness of substitutes
21
Q

define supply

A

supply is the willingness and ability of producers to produce a quantity of a good or service at a given price in a given time period

22
Q

how do taxes and subsidies impact the supply curve

A
  • taxes -> left shift in supply
  • subsidy -> right shift in supply
23
Q

what is a subsidy

A
  • a subsidy is money given by the government to increase supply and lower the price of a good or service
  • Government subsidise goods or services that have positive externalities
24
Q

what is a tax

A
  • a tax is money taken by the governmest to decrease supply and increase the price of a good or service
  • Government tax goods or services that have negitive externalities.
25
Q

what is a progressive tax

A

takes a larger percentage from higher income than lower incomes
eg income tax

26
Q

what is a regressive tax

A

takes a larger percentage from those with low income than those with high incomes eg VAT

27
Q

what is minimum price control

A

A minimum price is when the government don’t allow prices to go below a certain level.
- the floor shows the minimum price

28
Q

what is maximum price control

A
  • A minimum price is when the government don’t allow prices to go above a certain level.
  • it is used to try and limit prices and control inflation
  • the ceiling shows the maximum price
29
Q

what do the following cost curves look like
- fixed cost
- average cost
- marginal cost

A

fixed - straight line
average - smile shape
marginal - nike swoosh

30
Q

what are the pros and cons of division of labour

A

PROS
-allows workers to become more specialised leading to increased productivity
- Less training required

CONS
- creates boring, repetitive jobs (screwdriver jobs).
- decreased motivation

example -apple products

31
Q

define specialisation

A

when a firm concentrates its labour and resources on a certain type of production that is most beneficial to create high productivity and maximise income
eg, UK - banking

32
Q

define
- production
- productivity

A

production- total amount produced
productivity- average amount produced in a given period of time

33
Q

what is a
- monopoly
-oligopoly
- duopoly

A
  • monopoly - one firm controls the market
  • oligopoly - many firms control the market
  • duopoly- two firms control the market
34
Q

what is
- a free market
- a planned economy

A
  • FM - economic system based on supply and demand with no government intervention, Firms set a price - not government. Eg UK, Ausralian
    or US economy (capitalist)
  • PE - economic system where the government are in charge of the economy. (production and distribution of goods) Eg china, North Korea (communist)
35
Q

what is
- the market equilibrium
- the price mechanism

A
  • ME-

higher economics 2023 (3 decks)

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