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GCSE > Economics - Unit 1 > Flashcards

Economics - Unit 1 Flashcards

1
Q

What is a resource?

A

Something used to produce an output

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2
Q

What are the factors of production?

A

Labour - human input they have different skills and if they have a higher human capital then they are more productive
Land - land itself and the natural resources
Capital - goods that are used to produce other goods and services
Enterprise - taking risks and having. Ideas

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3
Q

What is the primary sector?

A

The extraction of raw materials e.g. Mining

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4
Q

What is the secondary sector?

A

Raw materials manufactured into goods

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5
Q

What is the tertiary sector?

A

The service sector

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6
Q

What is opportunity cost?

A

The next best alternative forgone when making a choice because the scarcity of capital economic problem and unlimited needs and wants

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7
Q

What is a market?

A

Where buyers and sellers meet to exchange goods

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8
Q

What is the market economy?

A

Where all the resources are allocated by private individuals and groups

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9
Q

What is a planned economy?

A

Where all resources are allocated by the government

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10
Q

What is a mixed economy?

A

Were some resources are allocated by the government and others by individuals or groups

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11
Q

What is the public sector of the economy?

A

The government sector of the economy which are organised and owned and ran by the government

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12
Q

What is the private sector of the economy?

A

The sector of the economy where firms are owned and run by private individuals and groups were their main aim is profit maximisation

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13
Q

What are the benefits to specialisation?

A
  • workers become more productive
  • lower average costs due to increased productivity
  • production levels are increased
  • higher pay
  • specific skills improved
  • motivation from job satisfaction
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14
Q

What are the costs of specialisation?

A
  • increased cost of training workers
  • workers become bored and quality may suffer
  • more expensive workers
  • borden due to lack of variety
  • other skills suffer
  • eventually replaced by machinery
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15
Q

What is the medium of exchange?

A

Handing over money for an item

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16
Q

What is the unit of account?

A

Measuring the value of money

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17
Q

What is the store of value?

A

When it keeps it value

18
Q

What is means of deferred payment?

A

Borrowing money

19
Q

What is a competitive market?

A

A market situation in which there are a large number of buyers and sellers

20
Q

What are the areas of competition?

A
  • price
  • quantity
  • promotions
  • branding
  • advertising
  • innovation
21
Q

What are the benefits of a competitive market for a consumer?

A

Shop around for the highest quality and lowest prices
Variety
Good consumer service

22
Q

What are the costs of a competitive market for a consumer?

A

Small firms cant gain economies of scale so cannot provide low costs
Confusion

23
Q

What are the benefits of a competitive market for a firm?

A

Gain market share
Grow larger
Able to provide goods and services at a price that are willing to pay it will thrive

24
Q

What are the costs of a competitive market to a firm?

A

Monopolies can drop prices

Fail to satisfy consumers so it will fail

25
Q

What is the economic problem?

A

Wants are infinite but resources are limited and scarce

26
Q

What is a monopoly?

A

When there is only one firm operating in the market

27
Q

What is a monopoly power?

A

When a firm has more than 25% of the market

28
Q

How do you achieve monopoly power?

A
  • Merger and takeover- less choice due to fewer firms you can there for raise prices and lower quality
  • statutory monopoly - give by Gov.
  • internal expansion - build more factories and shops increasing market share
  • branding - brand increases gain market share
  • cost barriers - firms gain economies of scale and lower there average cost so they can keep prices low to stop new firms entering a market
29
Q

Positive points of a monopoly

A

R + D
International competition
Exploitation of economies of scale which would lower average costs and then they may reduce prices

30
Q

Name the negative points of a monopoly

A

High prices due to no competition
Poor quality due to lack of competition
Land grab and bad for local economy

31
Q

What is demand?

A

The quantity buyers are willing and able to buy at a given price in a given period of time

32
Q

What does demand need to become effective?

A

The consumer must be able and willing to buy

33
Q

What is the contraction of demand?

A

The fall in quantity demanded due to the rise in price

34
Q

What is the extension of demand?

A

The increase in quantity demanded due to a fall in price

35
Q

what are the things that cause the demand curve to shift ?

A

PASIFIC

  • population
  • advertising
  • substitutes
  • income
  • fashion
  • interest rates
  • complements
36
Q

What is supply?

A

The quantity a producer is willing and able to produce at a given price in a given period of time
- more suppliers will enter a market when the price rises as the product is more profitable

37
Q

What causes the supply curve to shift?

A 
Productivity 
Indirect taxes
Number of firms entering the market
Technology
Subsidies 
Weather
Cost if production
38
Q

What does the PED measure?

A

It measures the responsiveness of the quantity demanded to a change in the price of a good
- always negative because price and quantity move in opposite directions

39
Q

What are the factors that influence PED?

A 
Number of close substitutes in the market 
Habit forming goods 
Luxuries and necessities
Time period under consideration 
Percentage of income spent on a good
40
Q

Why is PED important to a firm?

A

Important for making price decisions if they want to increase total revenue

  • if elastic they put price down to increase total revenue
  • if inelastic they increase price to increase total revenue
41
Q

What does PES measure?

A

Responsiveness of quantity supplied to a change in price

42
Q

What are the factors that influence PES?

A
  • Level of spare capacity
  • Level of stock and work in progress
  • Production lags
  • Time period
  • Substitutability of factors of production

GCSE (55 decks)

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