4.1.1 Flashcards
(37 cards)
define positive statement
can be tested/measured against facts
define normative statement
involves value judgement/opinion
can be political or moral
what’s the BEP for every country?
- what to produce? -> how many?
- how to produce it?
- who gets the output?
diff. societies address these in diff. ways
describe centrally planned economy
central authority creates 5 year plan
usually left/totalitarian/dictatorship govts.
e.g. N. Korea
describe mixed economy
mix of planned and market economy
some output made by state -> e.g. health, education
some privatisation + some public
e.g. UK
describe market economy
resources made for rich -> privately owned + traded
effective demand
but some can’t afford goods
e.g. Singapore
define effective demand
people want goods and can afford to pay for them and get output
what are the factors of production and their incomes?
land (natural resources) -> RENT
labout -> WAGE/SALARY
capital -> (machinery/buildings) -> INTEREST
enterprise (combine resources for output) -> PROFIT
why is the environment an example of land for factors of production?
it’s scarce
define opportunity cost
the benefits foregone of the next best alternative
define finite
not enough supply
will run out
what do PPFs show?
combination of 2 goods/services that could be made with finite resources
(axis show quantity)
what shape are PPFs usually? why?
concave to origin
resources are more efficient at producing 1 good than another
what’s the central purpose of economic activity?
the satisfaction of needs and wants
what do features of the BEP include?
trade-offs
conflicting objectives
what does the existence of scarcity imply?
individuals must make choices
what’s the main economic objective of firms in a market economy likely to be?
maximisation of profits
what does an economy do in basic terms?
convert inputs/resources into output
what is money?
a means of measuring and comparing the value of both resources and output
(not a factor of production in its own right)
define non-renewable
fixed supply
once used up there’ll be none left
unsustainable
e.g. fossil fuels, wood, fish stocks
define renewable
use of the resource doesn’t reduce amount available in future
can be replenished in a sustainable way -> reforestation
why can sustainable economic activity be seen as limiting?
reduces production and consumption in short run
why is unsustainable economic activity bad?
reduces options for future generations
define inter-generational inequality
people currently enjoy a standard of living that could threaten the well-being of future gens.
