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A HL Economics 2024/2025 > What is Economics? > Flashcards

What is Economics? Flashcards

1
Q

What is social science?

A

Study of people in society and how they interact

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2
Q

What is economics?

A

The study of the choices that people make in problems because resources are limited and needs and wants are unlimited.

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3
Q

Opportunity cost

A

The next best alternative that you give up when an economic decision is made

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4
Q

Production choices - 3 questions due to scarce resources

A

What should be produced and how many, how should things be produced and for whom should things be produced?

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5
Q

Microeconomics

A

Study of individuals, households and firm’s behaviours in decision-making in the allocation of resources

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6
Q

Macroeconomics

A

Study of the behaviour and performance of an economy as a whole, focusing on the aggregate (total) changes

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7
Q

Aggregate

A

Total

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8
Q

Scarcity

A

Limited availability of resources relative to the unlimited demand for goods and services

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9
Q

Interdependence

A

The concept that consumers all interact with each other and rely on each other to achieve their economic goals

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10
Q

Intervention

A

When the government involves itself in the workings of markets if certain societal goals are not going to be met.

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11
Q

4 factors of production

A

Land, labour, capital, entrepreneurship

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12
Q

Ceteris paribus

A

All other things being equal

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13
Q

Positive economics

A

Factual and objective claims backed by evidence

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14
Q

Normative economics

A

Subjective and value judgements that are opinion-based

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15
Q

Why does a production possibility curve assume that choices must be made?

A

Because resources are scare and there is a production limit, so trade-offs and choices must be made - producing more of one good means producing less of another

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16
Q

Theory of constant opportunity costs - straight line on a PPC

A

Resources used to produce goods are similar, opportunity cost is constant and there is a limit of resources and technology available

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17
Q

What is the difference between a need and a want?

A

A need is things we must have to survive, while a want is not necessary for our immediate physical survival

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18
Q

Why does scarcity exist?

A

Because of the conflict between finite resources and the infinite material needs and wants

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19
Q

Goods associated with a monetary cost are known as …

A

Economic goods

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20
Q

Goods with no economic cost are known as…

A

Free goods

21
Q

Choice

A

As needs and wants cannot be satisfied due to scarce resources, then we must make decisions between competing alternatives, resulting in opportunity cost

22
Q

Efficiency

A

Making the best possible use of scarce resources to produce the combinations of goods and services that are best for society, with the least amount of waste

23
Q

Equity

A

Fairness - may apply to the distribution of income and economic opportunity

24
Q

Economic well being

A

The quality of living standards - the ability to meet basic living needs, freedom to make choices, ability to maintain income levels

25
Q

Sustainability

A

Ability of present generations to meet their needs without compromising the needs of future generations

26
Q

Change

A

Economists must adapt their thinking when economic theories are applied, the outcome is not always the same

27
Q

Interdependence

A

The concept that consumers, producers and households all interact with each other and rely on each other to achieve economic goals

28
Q

De facto

A

Actual

29
Q

Why does a bowed shape curve occur?

A

As resources that are non-specific are transferred, the return increases slightly. When specific resources are transferred, the return increases massively. - theory of increasing returns/diminishing opportunity cost or vice verse

30
Q

Potential economic growth

A

New resources/technology are found which makes it possible to produce more goods and services. It does not mean that more is being produced.

31
Q

Diminishing returns

A

When the benefit of receiving something (specific resources to non-specific resources etc) decreases

32
Q

Production efficiency

A

When all resources are being fully used ie any point on the curve

33
Q

Production inefficiency

A

When resources are not fully utilised ie production point is inside the curve

34
Q

Free goods

A

Goods with no cost (economic or opportunity) associated with then

35
Q

Economic goods

A

Goods with a monetary cost associated with them

36
Q

Need

A

Things needed for immediate physical survival

37
Q

Want

A

Things we would like to have but are not necessary for our immediate physical survival

38
Q

Why is there increasing opportunity cost?

A

Resources are more suited to production of one good over the other so as non-specific resources are transferred, return diminishes

39
Q

How is economic growth shown on a PPC?

A

Dot moving closer to the curve

40
Q

What is a circular flow diagram?

A

A diagram made to represent the flow of money in an economy

41
Q

GDP

A

Gross domestic product - a monetary measure of the market value of all the final goods and services

42
Q

Examples of money injected into the economy

A

Export receipts

43
Q

Examples of money withdrawn from the economy

A

Saving, tax, import payments

44
Q

Investment economics definition

A

Adding to capital resources such as purchasing machinery etc

45
Q

What is an open economy?

A

When you trade with foreign markets

46
Q

What is a planned economy?

A

An economy that the government decides all aspects of production - amount of resources and goods avaliable, wages etc

47
Q

What is a free market economy?

A

Production is in the hands of individual firms and prices are used to ration goods based of the relative scarcity of the good.

48
Q

Resources

A

The factors of production used by firms to produce goods and services (land, labour, capital and entrepreneurship)

A HL Economics 2024/2025 (18 decks)

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