1.1 Nature of economics

Question 1

What is a positive economic statement

Answer 1

Statements that can be proved or disproved

Question 2

What is a normative economics statement

Answer 2

Statements that give a valued judgement

Question 3

What are the factors of production (C.E.L.L)

Answer 3

Capital, Enterprise, Land and Labour

Question 4

What is resource scarcity

Answer 4

There are infinity wants but the resources are limited

Question 5

What is the difference between ‘wants’ and ‘needs’

Answer 5

‘Wants’ are infinite and ‘needs’ are a necessity

Question 6

What is an example of ‘needs’

Answer 6

Shelter, Food and Water

Question 7

What is an opportunity cost

Answer 7

The loss of a next best alternative when a different option is chosen

Question 8

What is division of labour

Answer 8

Breaking down a task into small jobs mangable tasks

Question 9

What is specialisation

Answer 9

Concentrating on one product or task

Question 10

What are two advantages of division of labour

Answer 10

-It is more efficient
-Lowers unit costs

Question 11

What are two disadvantages of division of labour

Answer 11

-Boredom
-Works take less pride in work
-Unrewarding

Question 12

What are two advantages of specialisation (labour)

Answer 12

-Better Quality
-Lower units costs

Question 13

What are two disadvantages of specialisation (labour)

Answer 13

-Risk of structural unemployment
-If absent quality can of good can suffer
-Over dependence

Question 14

What are the advantages of specialisation (Country)

Answer 14

-Always economy to make full use of their resources
-Increases rate of production

Question 15

What are two disadvantages of specialisation (Country)

Answer 15

-Could lead to over extraction
-Could lead to structural unemployment if good is not need anymore

Question 16

What are the 4 functions of money

Answer 16

-Medium of exchange
-Store of value
-Measure of value
-Means of deferred payment

Question 17

What is meant by store of value as a function of money

Answer 17

It enables people to save the money in order to buy things in the future

Question 18

What is meant by medium of exchange as a function of money

Answer 18

Being able to exchange the money to get a good or service they wish to buy

Question 19

What is meant by a measure of value as a function of money

Answer 19

Being able to assess the value by comparing it to other prices

Question 20

What is meant deferred payment as a function of money

Answer 20

Being able to buy a good or service and paying on credit

Question 21

What is a free market economy

Answer 21

A economy where buying and selling goods and services is not controlled by the government

Question 22

What is a command economy

Answer 22

a economy where all resources are owned by the government and they allocate it

Question 23

What is a mixed economy `

Answer 23

An economy that is a mixture of free market economy and command economy

Question 24

What are two advantages of a free market

Answer 24

-Competition
-Efficient way of allocation scare resources

Question 25

What are two disadvantages of a free market

Answer 25

-Could lead to a increase in monopolies
-Inequality in resources

Question 26

What are two advantages of a command economy

Answer 26

-Greater equality of resources
-Full employment