Basic Economics Flashcards
(27 cards)
Define wants
Wants are goods and services that are not necessary but are things we desire or wish for.
Define needs
Needs are goods and services that are necessary in life, like water, food, shelter, etc…
Define resources
Resources are items used in the production of goods and services
State the four types of resources
Land
Labour
Capital
Enterprise
What is Land and give examples.
LLEC
Land are items that are natural resources used in the production of goods and services
Eg. Sun, coal and wind etc…
What is labour and give examples.
LLEC
Human effort (physical and mental) that goes into producing goods and services
Eg. Teachers, builders
What is capital and give examples.
LLEC
Man-made items used by workers in the production of goods and services.
Eg. Hammer, spanner etc…
What is enterprise and give examples.
LLEC
Also called entrepreneurs. The ability to combine the other 3 resources to produce goods and services. They manage and coordinate the business.
Eg. Bill gates, and Richard Branson
Define opportunity cost
Opportunity cost is the real cost of the next best alternative foregone
Define economic system
A system for managing resources in an economy
Define economics
Economics is concerned with the way society chooses and allocates its limited resources which have a alternative uses to produce goods and services to satisfy the infinite present and future needs and wants.
What is the economic problem?
Unlimited wants
Limited resources
Producers Consumers Government
Choices
Sacrifice
4 economic questions FWHH
For whom to produce for, what to produce, how to produce, how much to produce
What are the four economic questions?
WFHH
For whom to produce for?
What to produce?
How to produce?
How much to produce?
PPF MODEL
what is the letter below the line?
It is the waste of resources due to unemployment
PPF MODEL
what is the letter above the line?
resources that have been left unattainable due to the current fixed level of resources and technology
Who controls a market economic system
- no government intervention
- consumers and producers answer the four economic questions
What are the 4 key features of a market economy system?
Businesses focus on maximising profit
Competition
Leads to innovation
Public education and healthcare does not exist
Who controls a planned economic systems?
- The government owns all resources
- Government answers the 4 economic question
What are the 4 key features of a planned economy?
Aim for equality
Lack of choice, innovation, competition, efficiency
Stable
Everyone has a job, but doesn’t get to choose it
Who controls a mixed economy?
Contains elements of a market and planned economy
Production decision are mostly made by Private companies
What are 2 key features of a mixed economy?
Prices are determined by supply and demand
Government interference in the economy is fairly limited. But the government provides collective goods and services such as education, roads, schools etc..
Why is the role of the government in a mixed economy important?
- 4 points
Collects tax
Set a minimum wage
Rules and relegation
Equal access
Why is it important for the government to Collect tax
To provide goods and services to the community
Why does the government seta minimum wage?
So people get what they work for and they don’t get cheated
