basic economic ideas and resource allocation Flashcards
scarcity, choice and opportunity cost, economic methodology, factors of production, resource allocation in different economic systems, ppc, classification of goods and services (70 cards)
1
Q
scarcity
A
limited resources and unlimited wants
2
Q
opportunity cost
A
next best alternative forgone
3
Q
factors of production
A
land, labour, capital and enterprise
4
Q
economic questions
A
what to produce, how to produce, for who to produce for
5
Q
ceteris paribus
A
all things remain the same
6
Q
the short run
A
time period when a firm can change at least one but not all factor inputs
7
Q
the long run
A
time period when all factors of production are variable but with a constant, such as the state of technology
8
Q
positive statment
A
statements that describe the world as it is, without making any value judgments.
9
Q
normative statment
A
one that makes a value judgment.
10
Q
fundamental/basic economic problem
A
scarcity
11
Q
wants
A
things people want but don’t need eg supercar
12
Q
needs
A
things people need to survive eg food, water
13
Q
resources
A
inputs available for the production of goods and services
14
Q
choice
A
resources are scarce so individuals, firms and governments have to consider alternatives
15
Q
firm
A
any business that hires factors of production to produce goods and services
16
Q
macro economics
A
the study of an economy or a group of economies
17
Q
microeconomics
A
the study of individual markets (households and firms)
18
Q
model
A
a simplified view of reality used to explain economic problems and issues
19
Q
very long run
A
time period where all key inputs into production are variable
20
Q
entrepreneur
A
an individual who seeks out new business opportunities and is willing to take risks
21
Q
land
A
a factor of production; natural resources in an economy
22
Q
labour
A
a factor of production; human resources available in an economy
23
Q
low-income countries
A
income per head lower than 1025 in 2018
24
Q
capital
A
a factor of production; a physical resource made by humans that aids the production of goods and services
25
enterprise
as a factor of production, enterprise involves organising production and taking risks
26
physical capital
factors of production such as machinery, buildings and infrastructure
27
economic growth
in the short run, an increase in a countries output and, in the long run, an increase in a countries productive possibility
28
lower middle income countries
income per head 1026-3995 in 2018
29
human capital
the value of labour to the productive potential (future growth) of an economy
30
specialisation
the process by which individuals, firms and economies concentrate on producing those goods and services where they have an advantage over others
31
division of labour
where a manufacturing process is split into a sequence of individual tasks
32
middle income countries
1026-3995 lower -3996-12375 upper
33
economic system
the way in which production is organised and choices are made in an economy
34
market (free market) economy
an economic system where most decisions are taken through the price mechanism
35
planned economy
an economic system where resources are state owned and allocated by a central body
36
mixed economy
an economic system where both market forces and government are involved in resource allocation decisions
37
market mechanism
resource allocation decisions are taken by individual producers and consumers with no government intervention; also known as price mechanism
38
productive resources
resources that are available to be used
39
private sector
the part of the economy under private ownership
40
public sector
the part of an economy under government ownership
41
privatisation
where there is a change in ownership from the public to private sector
42
nationalisation
where there is a change in ownership from private to public sector
43
emerging economy
one that is making quick progress toward becoming a high-income economy
44
asian tiger economy
export-led, high growth economies in Asia
45
production possibility curve (ppc)
a simple representation of the maximum level of output that an economy can achieve, given its current resources and state of technology; may be referred to as a production possibility frontier
46
trade off
what is involved in deciding whether to give up one good or another good
47
productive capacity
the maximum output that can be produced when all resources are fully used
48
excludability
where it is possible to stop someone from consuming a good or a service
49
rivalry
where consumption by one person of a good or service reduces the availability of the good or service for others
50
non-rival
where consumption by one person does not reduce consumption by someone else
51
private goods
goods that are consumed by one person and not available to anyone else
52
free goods
goods that are not scare and have zero opportunity cost
53
public good
a good that is non excludable and non-rival
54
non-excludable
a situation where it is not possible to stop anyone else from using the good
55
pure public good
good which is both non excludable and non rival
56
quasi public good
good that has some but not the full characteristics of a public good
57
free rider
someone who does not pay to use a public good
58
merit good
a good that is thought to be desirable for consumers but which is under provided buy the market because of information failure
59
demerit good
a good that is thought to be undesirable for consumers and is over provided by the market because of information failure
60
information failure
a situation where consumers do not have full or complete information when making decisions
61
advantages of specialisation
Increased Efficiency
Higher Quality Output
Time Saving
Innovation and Expertise
Economic Benefits
Career Advancement
62
disadvantages of specialisation
Overdependence on a Specific Skill or Industry
Reduced Flexibility
Job Monotony and Boredom
Increased Risk of Obsolescence
Vulnerability to Market Changes
Limited Skill Set Development
63
advantages and disadvantages of division of labour
Advantages of Division of Labour
Increased Productivity
Higher Efficiency
Time Saving
Improved Skill Development
Lower Production Costs
Disadvantages of Division of Labour
Monotony of Work
Lack of Flexibility
Overdependence Among Workers
Reduced Job Satisfaction
Risk of Structural Unemployment
64
Planned Economy advantages and disadvantages
Advantages:
Efficient Resource Allocation in Key Sectors
Reduced Inequality
Economic Stability
Focus on Social Welfare
Disadvantages:
Lack of Consumer Choice
Inefficiency and Bureaucracy
Lack of Innovation
Risk of Corruption and Poor Planning
64
characteristics of successful entrepreneurs
Risk-Taking
Innovative Thinking
Self-Confidence
Strong Work Ethic
Resilience and Perseverance
Leadership Skills
Vision and Goal Orientation
Adaptability
Decision-Making Ability
Good Communication Skills
65
mixed economy advantages and disadvantages
Advantages:
Balance of Freedom and Control
Protection of Private Property with Social Welfare
Efficient Resource Use
Government Support in Key Areas
Disadvantages:
Government Intervention Can Be Inefficient
Unequal Distribution of Resources May Persist
Conflict Between Public and Private Interests
Bureaucracy and Regulation Costs
66
free market economy advantages and disadvantages
Free Market Economy
Advantages:
Consumer Choice
Efficient Allocation Through Supply and Demand
Innovation and Incentives
Economic Freedom
Disadvantages:
Inequality
Market Failures
Lack of Public Goods
Exploitation and Unregulated Practices
67
issues involved in moving from planned to mixed
Unemployment
Inflation
Income Inequality
Loss of Social Security
Privatisation Challenges
Institutional Weakness
Corruption and Cronyism
Lack of Market Experience
Capital Flight
Economic Instability
68
why does a ppf graph shift?
Changes in Resource Quantity (e.g. increase in labor or capital)
Improvements in Technology
Education and Training (leading to a more productive workforce)
Discovery of New Resources
Policy Changes (e.g. investment incentives or deregulation)
Natural Disasters or Wars (can shift it inward)
Population Growth or Decline
69
example of a free rider problem
Public Parks – People can use a public park without paying for its maintenance. Since access isn’t restricted, individuals may benefit from the park (walking, relaxing, etc.) without contributing to its upkeep, leading to overuse or underfunding.
