Econ paper 1 mistakes

Question 1

individual demand

Answer 1

refers to the demand of a good or service by and individual consumer

Question 2

market demand

Answer 2

the total demand of goods and services by adding up together indidvidual demand of consumer

Question 3

What are the causes for for shifts of demand

Answer 3

Advertising and marketing
income
population size
substitutes and complements
tastes and fashion
goverment policies (taxes and subsidies)
economic situation

Question 4

consequences of shifts in demand
4

Answer 4

demand for substitutes may decrease
if the price rises but income rises faster than demand
increases in demand producers can gain economies of scale.
demand falls that producers may go out of business

Question 5

benefits of specialization on producers

Answer 5

higher output
higher productivity
higher quality
bigger market
economies of scale

Question 6

costs of specialization producers

Answer 6

Turnover of workers as boredom increases
dependency
costs may be higher because increase in demand for good that may become shorter in supply

Question 7

benefits of Specialization on region

Answer 7

better infrastructure
jobs for residents
efficient use of resources

Question 8

costs of specialization on region

Answer 8

risk of fall of demand (dependency)
resource exhaustion
loss of adventure

Question 9

Benefits of specialization in a country

Answer 9

higher GDP
economies of scale
International trade
government revenue because gdp increases government receives more money in tax.
more jobs

Question 10

costs of specialization in a country

Answer 10

unemployment, workers in declining industries may not be able to find new work
over-dependency
world prices could fall that then means whole country revenues decrease
structural employment from over specilizing
overexploiting leads to unsustainable development
negative externalities(environmental damage )

Question 11

what are the causes of shifts in the supply curve?

Answer 11

government legislation (taxes +interest rates )
cost of production-firm would supply less at every price
technology -can increase output
climate
icreasing in the number of producers or increasing the sizw of the firm

Question 12

What causes movement along the curve?

Answer 12

Change in price

Question 13

What are the consequences of a shift in the supply curve ?

Answer 13

Economies of scale,greater profits for consumer and lower prices for consumer
monopoly -if a company becomes more competitive than its rivals because it able to supply at the lowest price that it may become a monopoly.
increase in exports

Question 14

When will supply be elastic

Answer 14

When the producer has spare capacity
high stock levels
when a good or service can be supplied in a short time

Question 15

how can we increase ps

Answer 15

create spare capacity
improve storage methods
training employees in more than one job

Question 16

What is cost?

Answer 16

How much money it takes the producer to provide the product

Question 17

What is non-price competition
Why is this done ?

Answer 17

marketing
personalized costumer service
quality of the product
specialized product
convenience

serve to create brand loyalty

Question 18

what do producer have to do when they are in a competitive market ?

Answer 18

find ways to increase efficeny yto llwer costs for example could invest in technology
increased innovation will lead to increased productivity

Question 19

What happens when you increase innovation as producers?

Answer 19

increased productivity
and growth in economy
increase in demand and supply
those who innovate will stay ahead of competition and attract more consumer those who don’t could be forced out of markets ?

Question 20

What does productivity depend on ?

Answer 20

education and training of the workforce
investment in production process (eg technology)
better quality of raw material(when producing won’t cause problems so u can maximise productivity)

Question 21

increase in productivity

Answer 21

larger economies of scale
increase in market share
higher profit for firm
economic growth

Question 22

How can producers increase productivity?

Answer 22

workers becoming better skilled
specializing n one part of the production
new technology/more capital equipment

Question 23

What is the aim of most producers?

Answer 23

Maximization of profits

Question 24

Why is high productivity important
what will firms see?

Answer 24

the lower average cost for firms and increasing economies of scale,this means its more competitive on a global scale improving the balance of payments
greater profits- can be reinvested to improve productivity further

Question 25

Why is high productivity important for governments?

Answer 25

increased government revenue +increase in total output
greater exports leading to economic growth

Question 26

How important is revenue ?

Answer 26

Without a steady flow of revenue, producers can’t gain profit
growth in revenue incentivises producers
steady revenue means firms are more suitable in the eyes of banks to be permitted loans/ over drafts

Question 27

What are internal economies of scale
What is the acronym that helps us remeber this ?

Answer 27

This is the result of the growth of a business itself.
this is when quantity demanded rises quicker than total costs
Really fun Mum try making pies
managerial -as firms get bigger they can get managers to control the workforce and ensure it’s productive.
risk bearing
financial-lower rates of interest
technical-specialist machinery boost productivity
marketing -bulk buy advertisement
purchasing - bulk buying

Question 28

What are external economies of scale?

Answer 28

out of control of the firm
eg if transport links improve
concentration of firms increases so prices are lower therefore costs are reduced .

Question 29

What are diseconomies of scale

Answer 29

When there is an increase in the long-term average cost and output decreases
3c and m
control coordination ,communication and motivation

Question 30

What is the labour market ?
What does interaction give ?

Answer 30

supply of labor from households and demand for labor by firms
the interaction between the two will give price for labor
(wage) is income from the household however a cost for firms
the forces of supply and demand of labour is what sets the wage levels however trade unions and government will influence wage level

Question 31

What might prevent the perfect operation of labor markets?

Answer 31

Lack of skill
unwillingness to relocate
personal problems
information failure

Question 32

What information must be exchanged at labor markets?

Answer 32

wage levels
location
competition
conditions of employment

Question 33

What factors affect the supply of labour?

Answer 33

Training and Education
wage levels
non-monetary factors
additional payments
barriers to entry
size of the working population ,rrtiremnet ect

Question 34

What is a real wage?

Answer 34

hourly pay adjusted for inflation

Question 35

What is the role of the central bank ?

Answer 35

The Role of the central bank
to issue notes and to control the supply of it
control monetary policy by setting the bank rate
set interest rate 3
act as the bank for commercial banks

provide financial stability
manage the country’s foreign reserves.

Question 36

What is the role of commercial banks

Answer 36

pay a rate of return when savers decide to save things in banks
issue higher rates of interest for borrowers
offer safety deposit boxes for expensive items
issue loans to individuals

Question 37

what is real of insurance companies

Answer 37

consumer agrees to a payment so that the financial sector will recompensate for damage,loss or death

Question 38

What is the role of building societies?

Question 39

difference between building societies and banks ?

Answer 39

Shareholders own banks ,banks aim is to make profit for shareholders
shareholders own bank and they are usually customers

Question 40

Why is credit provision important?

Answer 40

without credit economic activity would be greatly limited
increases consumption by allowing people to buy and give money back once they have it
producer use credit so they don’t have to save money before investing and growing
the government uses credit to enable them to spend before tax revenue is raised