Chapter 1 -6

Question 1

Define scarcity

Answer 1

A situation where there is not enough to satisfy everyone’s wants and needs

Question 2

Define scrace

Answer 2

Insufficient to meet demand

Question 3

Explain economic goods (3)

Answer 3

Requires the use of scarce resources

can be sold to make profit (monetary value)

Making/consuming them involves opportunity cost

Question 4

Explain free goods (3)

Answer 4

does not use scarce goods (no O.C)

Adds no monetary value to the country’s GDP

infinetely abundant

Question 5

What is the economic problem

Answer 5

unlimited wants exceeding finite resources

Question 6

What are the 4 factors of productions (4)

Answer 6

land

labour

capital

enterprise/entrepreneurship

Question 7

Define land (FoP)

Answer 7

gifts of nature available for production

Question 8

Define labour (FoP)

Answer 8

human effort used in producing goods and services

Question 9

Define capital (FoP)

Answer 9

human made goods used in production

Question 10

Define enterprise (FoP) (2)

Answer 10

willingness and ability to bear uncertain risks and to make decisions in a business

Brings together the other 3 factors of production

Question 11

Define consumer goods

Answer 11

goods and services purchased by households for their own satisfaction

Question 12

What are the two types of mobility of the factors of production (2)

Answer 12

Occupational

geographical

Question 13

Define occupationally mobile

Answer 13

Can be used for different purposes

Question 14

Define geographically mobile

Answer 14

capable of moving from one location to another

Question 15

Define productivity

Answer 15

term used to define the output per factor of production in a given amount of time

Question 16

What is investment

Answer 16

spending by firms on capital

Question 17

What is depreciation

Answer 17

Capital getting worn out and broken

Question 18

What is gross investment

Answer 18

new capital

Question 19

what is net investment

Answer 19

total increase or decrease in capital stock

Question 20

Equation for net investment

Answer 20

Gross investment - depreciation = net investment

Question 21

Define negative net investment

Answer 21

quantity of capital falling overtime

Question 22

Define opportunity cost

Answer 22

The value of the next best alternative foregone when a decision is made

Question 23

Define Production possbility curve

Answer 23

A simple model showing the combinations of output of two goods which can be produced by the resources (FoPs) available in an economy

Question 24

Define economic agents

Answer 24

decision makers in an economy (those who undertake economic activity)

Question 25

Who are the 3 economic agents (3)

Answer 25

Governments households/individuals producers

Question 26

What are the 3 types of households/individuals (economic agents) (3)

Answer 26

consumers workers savers

Question 27

Define stakeholders

Answer 27

any individual/group/organisation that is affected by an economic decision

Question 28

Define economic systems

Answer 28

the institutions, orgnaisations and mechanisms that influence economic behaviour and determine how resources are allocated

Question 29

What are the 3 key allocation decisions

Answer 29

what to produce? How to produce it? Who is to receive the products produced?

Question 30

Define directives

Answer 30

state instructions given to state owned enterprises

Question 31

causes of geographical immobility of labour (3)

Answer 31

Differences in the price and availailuty of housing in different areas and countries family ties linguistic barriers

Question 32

How is the quantity of labour determined? (4)

Answer 32

the size + age structure of population retirement age school leaving age attitude to working women

Question 33

number of hours which people work is influenced by: (5)

Answer 33

the length of the average working day whether they work full or part-time the duration of overtime the length of holidays taken by workers the amount of time lost through sickness and illness