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Economics > Unit the basic economic problem > Flashcards

Unit the basic economic problem Flashcards

1
Q

Want

A

Is something we desire to have eg pet

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2
Q

Need

A

Is the basics of survival eg shelter

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3
Q

Factors of production

A

Land - raw materials eg oil
Labour - work force eg workers
Capillaries - machinery eg tolls
Enterprise - enetprenuer who brings all factors of production together

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4
Q

Good

A

Items we can finically touch

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5
Q

Service

A

Something that is provided eg education

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6
Q

Are factors of production limited

A

Yes

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7
Q

Oppertunity cost

A

Is the next best alternivite choice

Eg you go yo the shops you can either buy a twin or a mars bar, if you chose the twix the Oppertunity cost is the mars bar

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8
Q

Oppertunity cost induviduals, firms and government

A

Induviduals - mxamixe untility - limited income - decide what to spend limited incom to maximize utility

Firms - maximize profit - limited factors of production - produce in oder to maxmize profit

Government - maximize people welfare - limited revenue - decide what goos and services to provide to maximize welfare

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9
Q

The basic economic probelm

A

The basic economic problem is scarcity

Wants are unlimited whereas the factors to make theses resources are limited

This is why no one in the world can have all the goods and service they easier

This means everyone has to make choices to maximize utility

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10
Q

Wages

A

A fixed regular payment earned for work or sevice

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11
Q

Salaries

A

Fixed regular payment

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12
Q

State benifits

A

Sum of money paid by the government of people in certain circumstances

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13
Q

Tax credits

A

Payment for people earning low incomes

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14
Q

Pensions

A

Tax-free savings for retirment

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15
Q

Investments

A

Spending on capital goods

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16
Q

Disposable income

A

Incomeleft agfter taxes have been deducted

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17
Q

Discreattionary income

A

Income left over after taxes and essential bills

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18
Q

Why do induviduals save

A 
Emergency funds
Treating yourself e;g handbag
Financial protection
Reterirment
Future spending
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19
Q

Ways to save

A

Cash ISA- tax-free savings

Instant access savings - can make withdrawals anytime - access at any time

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20
Q

Why do people borrow

A

To buy assets eg car
To cover unexpected hours repairs wig boiler
Day to day expensive

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21
Q

Ways to borrow

A

Mortgage - loan to half you buy property
Credit card
Bank loan
Payday money lenders - small amounts of money which is loaned

22
Q

Budgeting

A

A forward fincail of likely income and expenses for a given period

23
Q

Causes of financial uncertainly

A

Change in prices/ rate of inflation - can only buy basics

Change in tax - less disposible income

Change in interest rates - people borrowing need to pay more
- people encouraged to save more

24
Q

Demand

A

How willing and able a purchaser is to buy a product

25
Q

Effective demand

A

Actual amount of goods and services that buyers are producing in the market

26
Q

Why does the demand curve slope downwards

A

The law of diminishing marginal utility
The substitution effect
Income effect

27
Q

Untility

A

The amount of satisfaction gained form consuming products

28
Q

Total utilty

A

Total satafsction gained for consumer good and services

29
Q

Diminishing marginal utility

A

As a consumer cosumes an extra unit the stasfaction gained decreases

30
Q

Subsituation effect

A

As prices rise a consumer will emend less of a product

31
Q

Income effect

A

As prices of a good rise consumers in some can buy less units of any product

32
Q

Factors affecting demand curves

A 
Population
Advertising
Fashion and trends
Incomes
Price of substitute goods and services
33
Q

Supply

A

Amount of goods and services that producers are willing to sell at a given price

34
Q

What does a supply curve slope

A

The profit motive
Production and costs
New entrants coming into the market

35
Q

The profit motive

A

When the market prices rises following an increase in demand, this becomes more profitable for firms to increase output

36
Q

Production and costs

A

When output expands, a firms production costs tend to rise, therefore a higher price is needed to cover theses costs

37
Q

New erants coming into the market

A

Higher prices may create an incentive for other businesses to enter the market leading to an increase in total supply

38
Q

Effect of prices on supply

A

Increase price - firms can make more profit by supplying more
Decrease - the firm makes less frofit causing supply to contract

39
Q

Shifts in the supply curve

A 
Productivity
Technology
Weather 
Cost of production
Number of firms
40
Q

Productivity

A

the amount produces per unit time

41
Q

Market

A

Where buyers and sellers of a good or service come together to exchange their good or services for a price

42
Q

Returns to the factors of production

A

Land - rent
Labour - wages
Capital - interest
Enterprise - profit

43
Q

Short run

A

At leat one of the factors is fixed and can’t be expended

44
Q

Long run

A

All the factors of production can be varied

45
Q

Variable costs

A

Costs that change with level of Output

Eg raw materials

46
Q

Fixed costs

A

Costs that don’t change with the level of output eg rent

47
Q

Average fixed costs

A

Fixed costs per unit produced

48
Q

Average variable costs

A

Variable cost per unit produced

49
Q

Average total costs

A

Cost per unit

50
Q

Total revenue

A

Income received by selling items

Economics (10 decks)

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