eco aos 1

Question 1

market

Answer 1

the exchange of goods and services which takes place as a result of buyers and sellers being in contact with one another

Question 2

microeconomics

Answer 2

analysis of the market behaviour of individuals and businesses

Question 3

macroeconomics

Answer 3

Analysis of the overall economy, including markets, businesses, consumers and governments

Question 4

positive economics

Answer 4

Free of personal opinion
Based on fact, evidence
you can collect and see
Can be proved or disproved

Question 5

normative economics

Answer 5

Based on personal opinion
Based on value
judgements
Can’t be proved or
disproved

Question 6

dynamic pricing

Answer 6

pricing changing depending on demands

Question 7

market equilibrium

Answer 7

when the market supply equals the market demand

Question 8

relative

Answer 8

one thing compared to another

Question 9

relative scarcity

Answer 9

resources are limited compared to the demands placed upon those resources via wants and needs

Question 10

factors of production is used to produce

Answer 10

the goods and services to meet the needs and wants of people

Question 11

land

Answer 11

is those resources that occur in nature eg minerals, water, forests, crops, actual land

Question 12

labour

Answer 12

physical and mental effort by humans in the production process, eg bakers in bakery, factory workers

Question 13

capital

Answer 13

resources made to help produce other products eg ovens, factory machine, table and chairs in classroom to produce quality education

Question 14

opportunity cost

Answer 14

is the value of the next best alternative
that is foregone whenever a choice is made

Question 15

when does opportunity cost arise?

Answer 15

any time someone makes a choice between
alternatives – choice implies you are giving up something

Question 16

opportunity costs for businesses

Answer 16

They have limited land, labour and capital available – so they have choose what they do and also what they wont do
eg Star has only so many teachers and so much space – so we gotta choose which
students get to come here and which subjects to offer to the students

Question 17

Opportunity costs for governments and nations

Answer 17

Choices are really hard for governments

They are always short of resources (mainly
money which comes from tax) – and they always have too many things they would like to do (projects that cost
money eg roads, aged pension, education

Question 18

what does the PPF illustrate?

Answer 18

what a business or even an economy can produce when all resources available are used to maximum efficiency
- no resources are being wasted or under used

Question 19

Points to the left of the curve

Answer 19

are not efficient – more output
could be produced with the same resources

Question 20

Points to the right of the curve

Answer 20

are not currently achievable – you would
need either more resources or existing resources to workmore productively

Question 21

scarce resources. economies and businesses have to choose what…

Answer 21

products to make with their scarce land, labour, capital –they can’t make unlimited quantities of every good and

Question 22

link between scarcity and PPF

Answer 22

The PPF illustrates the combination of goods and services an economy/business can produce with its relatively scarce amount of resources – land, labour and capital

Question 23

PPF and opportunity cost

Answer 23

It shows what a business or an economy has to give up in order to make more of something

Question 24

efficiency

Answer 24

fully utilising all of your land, labour and capital

Question 25

PPF and under-utilisation of resources

Answer 25

Sometimes, some resources either have spare capacity or are not working at their best - Workers are being lazy/scrolling/taking heaps of sick days - Equipment is breaking down - Raw materials are not being accessed on time

Question 26

trade-offs

Answer 26

occur whenever individuals, businesses or governments make choices between different ways that scarce resources might be used.

Question 27

cost benefit analysis

Answer 27

it is a technique the decision maker uses to make their decision about the trade-offs

Question 28

the 3 basic economic questions

Answer 28

for an economy arise because of the problem of relative scarcity. They include the What and how much to produce How to produce For whom to produce

Question 29

what and how much to produce

Answer 29

Making decisions about how resources should be allocated or used so that the right types and quantities of goods or services are produced.

Question 30

how to produce

Answer 30

deciding the best types of production methods to be used in making goods and services

Question 31

for whom to produce

Answer 31

how the goods, services and incomes that are produced in the economy will be divided or shared between individuals.

Question 32

an economic system

Answer 32

is a collection of national institutions or organisations that coordinate the production and distribution of goods, services and incomes amongst the population.

Question 33

traditional economies

Answer 33

based on established culture and rituals not common and is usually only used in the most remote pockets of poor or third world countries – among tribes in the Amazon rainforest remote parts of African desert mountains of Papua New Guinea

Question 34

A pure market economy

Answer 34

relies solely on the operation of markets where buyers, sellers and a system of prices answer the three basic economic questions.

Question 35

purely planned ecomies

Answer 35

rely entirely on powerful and often non-democratic, dictatorial, central governments to make key economic decisions about what, how, and for whom to produce.

Question 36

mixed economies

Answer 36

Almost all of the world’s economies are mixed Almost all of the world’s economies involve elements of market and planned economies Some are closer to one extreme than the other