Economics Pages 1-10 Flashcards
(23 cards)
What is Economics?
Study of the social relations of production and distribution and how different societies cope with basic economic problem of scarcity. It is also the study of human behaviour as it makes rational decisions to satisfy human needs.
What are Free Goods?
Goods that do not command value in a market as thy are freely abundant, e.g., Oxygen in the atmosphere, sand in the desert.
What are the Economic Goods?
Command value in the market as they are scarce goods, any good that has a price commands value and is a economic good, e.g., a banana
What is the Economic Problem?
Scarcity, choice, needs and wants
What is scarcity?
Scarcity is based on the premise that human beings have unlimited wants and needs and that the resources which can be used to fulfil these wants and needs are unlimited. This means that choices have to made on how to utilise these resources
If resources were not scarce, what would that mean?
there would be no need to choose between competing alternatives
What are the four factors of production?
Land, Labour, Capital, Enterprise
What is the the factor payment for each FOP?
Land ~ Rent Labour ~ Wages Capital ~ Interest Enterprise ~ Profits
What are the three key groups of Economic Agents?
Households, Firms, Government
What is the role of Households?
Consumers who demand goods and services. In order to be able to buy goods, households need income, so they also take decisions about the supply of their labour
What is the role of Firms
Produce output of goods and services. Firms also make choices, particularly about which goods or services to produce, and the techniques of production to be used. The prices they are sold at are also important to economic analysis.
What is the role of governments
Undertake Expenditure, and influences the economy through it’s taxation and regulation of markets
What is Opportunity cost?
Economic agents face constraints on their choices. as soon as they face one course of action they are locked out of any alternatives
What are the objectives of households?
Assumed to make decisions that maximise their satisfaction (or utility)
What are the objectives of firms?
Varied, however the main one is to make profits
What are the objectives of governments?
varied, however major ones are to have a stable economy, to avoid excessive unemployment and steady economic growth
What is a positive statement
Objective and fact based
What is a normative statement
Subjective and fact based
What is an extension of demand
Price decreased and demand increased
What is a contraction of demand
When the price rises and demand falls
Name all parts of PASIFIC
Population, advertising, Substitutes, Income, Fashion and taste, income tax, complements
Name one example that would cause an outward shift in the demand curve
Any answer using one of the PASIFICS e.g a growth in population
Name one example that would cause an inward shift in the demand curve
E.g the piece of a substitute falling
