1.1 The Economic Problem Flashcards Preview

EDEXCEL Economics B Paper 1 > 1.1 The Economic Problem > Flashcards

Flashcards in 1.1 The Economic Problem Deck (20)
Loading flashcards...
1
Q

Define scarcity

A

how resources are limited in supply and so choices have to be made for their use

2
Q

What is the result of humans having unlimited wants?

A

Choices having to be made over the allocation of resources

3
Q

Define the economic problem

A

the concept that wants are unlimited but resources are limited so choices have to be made about their use

4
Q

Define opportunity cost

A

the foregone option that wasn’t selected

5
Q

Define Trade-off

A

the choice between 2 options

6
Q

What is the importance of an opportunity cost to a consumer?

A

May choose to buy something of a higher quality at the opportunity cost of buying something else, due to the higher cost

7
Q

What is the importance of an opportunity cost to a producer?

A

Choosing to sell a good at a higher price may incur the opportunity cost of the demand for that good

8
Q

What is the importance of an opportunity cost to the government?

A

Choosing to invest money into different departments (e.g. Education) has the opportunity cost of investing it in other areas (e.g. Healthcare)

9
Q

Define normative statement

A

a statement based upon opinion and judgement

10
Q

Define positive statement

A

a statement based on solid facts which can be tested and proven as true or false

11
Q

Give the 10 possible business objectives

A
Profit Maximisation
Sales Maximisation
Satisficing
Survival
Market Share
Cost Efficiency
Return on Investment
Employee Welfare
Customer Satisfaction
Social Objectives (CSR)
12
Q

Define Satisficing

A

Wanting to make profits without profit maximising (profits are important but not the be all and end all)

13
Q

What is CSR?

A

Corporate Social Responsibility - donating parts of the profits to charities and foundations to help improve the world

14
Q

Define stakeholder

A

Someone who has an interest in the firm

15
Q

Give 6 examples of stakeholders

A
Staff
Shareholder
Union
Supplier
Pressure Group
Customer
16
Q

Define economic agent

A

Those who are involved in economic activity

17
Q

Define internal stakeholder

A

People from within the organisation

18
Q

Define external stakeholder

A

People outside the organisation with an interest

19
Q

Give 2 advantages of CSR for a business

A

Improve public image

Help the local community

20
Q

Give 2 disadvantages of CSR

A

Reduces profits

Takes a lot of time