Economics Paper 1 Topics Flashcards
(19 cards)
Evaluate costs and benefits of specialisation for producers
Benefits - Higher output
- Higher productivity
- Higher quality
- Time saving
Costs - Resources may become used up
- Dependency on machinery/workers
- Movements of workersEvaluate costs and benefits of specialisation for workers
Benefits - Higher worker satisfaction
- Increase their skill - higher wages
- Increase standard of living
- Use natural strengths
Costs - Boredom
- Deskilling - lose their other skills
- Unemployment - not have the skills needed for other work
Evaluate costs and benefits of specialisation for regions
Benefits - Efficient use of resources
- Creates job for residents
Costs - Risk of fall in demand - industry collapse
- Resource run out
- Loss of advantage (other countries do it better)
Evaluate costs and benefits for specialisation for countries
Benefits - Economics of scale and efficiency - doing what they are best at, increase output
- More job creation
- Improve standard of living, increase income
- Greater government revenue - taxes, increase output
Cost - Unemployment - workers in declining industries
- Over dependence - dependent on very small amount of products
- Over exploitation of resources - unsustainable development
- Negative externalities
Analyse the causes and consequences for consumers and producers when there is a shift in the demand curve
Shift - non priced
Income - rise in income, buy more goods.
Marketing - advertising
Tastes and fashion - preference, lead to going out of demand
Substitutes and complements - substitutes rise in price, demand for good increases. Complementary good decrease in price, demand for goods increase.
Population - increase population - increase demand for health care
Government policies - taxes and subsidies.
Economics situation
Price expectations - if people expect price rise, increase demand for the product
Analyse the cause and consequences for consumers and producers when there is a movement in the demand curve
Movement - change in price
Quantity and demand move in opposite direction, increase in price, quantity demand falls.
Consumer’s income stays the same, movement up, can buy fewer goods
Producers, rising price and fall in demand lead to lower sales and profits.
Analyse the cause and consequences for consumers and producers when there is a shift in the supply curve
Shift - non price
Cost of production - increase cost, supply less at given price
Taxes and subsidies - tax (rise in cost, quantity supplied fall at each price)
Subsidies - allow to supply more at every price
Technology - new technology, reduce cost of production/ increase amount produced
Climate - agriculture, change in weather
Increase amount of producers - increase supply
Government regulations - intervene in the market
Analyse how competition affects price
Increased competition causes supply curve to go to the right, increase quantity causing a fall in price.
If demand is price inelastic, and supply increase, price falls sharply.
If demand is price elastic, and supply increase, price doesn’t fall sharply.
Advertising can lead to increase in price
Innovation can lead to price increase
Evaluate how economic impact of competition on producers
Competition forces producers to improve efficiency. Reduce their cost,
Force them to innovate and stay ahead of competition
Negative aspects, slow adapting firms may go out of demand. New tech, lead to unemployment
Evaluate how economics impact of competition on consumer
Lower prices and better quality. Increase variety and more innovation.
Negative - encourage to buy products they don’t need
Monopoly
Monopoly is a sole producer of a good or service.
High barriers to entry -
Legal
Greater efficiency
Location - sole producer in a village/town
Copy rights and patent - prevent idea copying
Oligopoly
Oligopoly is a small number of firms control the large majority of market share (50%)
Low barrier to entry
Small firms exist
Oligopoly try and control the market by collision to set prices (this is illegal)
Evaluate the importance of production
Increase in production :
- Increase in employment
- Increase in profits for a firm/industry
- Increase in market share
- Economic growth for economy
- Rise in standard of living
Evaluate the importance of productivity
Productivity - measure of the degree of efficiency in the use of factors of production
Productivity can be improved through investments, better education
Increase productivity :
- Lower average cost and increase economies of scale
- Greater profits, allow higher wages
Costs :
- Increase productivity, use technology, increase unemployment
- Increase productivity, increase competition, fall of other countries
Analyse the factors affecting supply of labour
Wage rates - Higher wages, more labour
Size of working population - Older population, less supply of labour
Other money payments - overtime payments
Non - monetary factors - working condition
Barrier to entry - qualification needed
Education and training - increased number of skilled workers
Analyse the factors affecting demand of labour
State of economy - Growing economy, more labour needed
Increased demand - fast growing markets, need labour
Fall in real wages - firms may use labour, employ more people
Productivity of labour - increase productivity of labour, labour cheaper
Profitability of firms - large profits, hire more people
Evaluate the importance of the financial sector for consumers
Credit Provision - Encourage consumers to spend beyond their limit
Liquidity provision - How easy to turn assets into cash
Evaluate the importance of the financial sector for producers
Credit Provision - Allow them to borrow money
Liquidity Provision - Allow them to continue when facing unexpected demands for cash
Evaluate the importance of the financial sector for the government
Credit Provision - Allow them to borrow money when tax hasn’t been collected
