Economics Flashcards
(22 cards)
What is economics?
A social science that studies the decisions made by individuals
What is a need?
A good or service necessary to maintain a standard of living
What is a want?
A good or service purely for the entertainment of an individual
What is scarcity?
The basic economic problem of unlimited needs and wants but limited resources to fulfill them
What is market?
A place in which goods are exchanged between buys and sellers
What is interdependence?
The mutual dependence between participants in an economy. The reliance between consumers, businesses and governments
What is the household sector?
Us (consumers)
What is the Business sector?
Producers
What is demand?
The amount people are willing to buy goods or services for a certain price
What is the law of demand?
States the quantity of a good or service demanded varies inversely to price
What is supply?
The quantity of a good or service that a business is willing and able to offer for sale at a given price at a given point in time
What is the Market Equilibrium?
The point at which supply and demand curves intersect
What is opportunity cost?
The next best option when making a decision
What decides the most economic decision?
The decision that will give you the most for the least amount of money
What are the four economic resources and explain them with examples
Land
Labour
Capital
Enterprise
What are the 4 parts of the circular flow of income
Income
Economic Resources
Goods & services
Consumption
Describe the 3 economic questions
What
How
For whom
TO PRODUCE
Explain how the economic system answers the 3 questions to make resource allocation decisions.
What - bussinesses will produce the goods and services that people want or need
How - businesses aim to make as much profit as possible and so will use the cheapest production method
For who - people earn money working for businesses. High income earners will be able to buy more goods and services
What is the market system?
The network of buyers and sellers that come together to trade in a given product or service.
Explain how the government intervenes to deal with the problems that arise from inefficient allocation of resources in the market system
By providing services such as healthcare, housing and education to low income earners, they can get the goods and services they need. This also helps people get into the workforce and continue the circular flow of income.
DEMAND
as price increases demand ____
decrteases
SUPPLY
as price increases demand _____
