Economics Revision Flashcards by Rachel Hull

Define Economic Problem

The Economic problem is when there are limited resources to satisfy the economy’s growing wants.

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Define Needs

Something that is essential and very necessary for survival, or something that you need.

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Define Wants

Something that is not essential for survival or something that is for your personal wants. Something you can easily go without.

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Define Complimentary Goods

Give some examples…

Complimentary goods:
Something that go hand in hand with each other and one would not work without the other
For Example: A computer and a charger, a car and fuel, computer and mouse etc. etc.

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Define Substitute Goods

Give some examples…

Substitute goods:
Something that can be easily replaced by something else, or something similar
For Example:
Coke and Pepsi
Twisties and Chips

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Define the Primary Sector of the Economy

The primary sector of the economy extracts or harvests products from the earth. The primary sector includes the production of raw material and basic foods.

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Define the Secondary Sector of the Economy

The secondary sector of the economy manufactures finished goods. All of manufacturing, processing, and construction lies within the secondary sector.

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Define the Tertiary Sector of the Economy

The tertiary sector of the economy is the service industry. This sector provides services to the general population and to businesses. Activities associated with this sector include retail and wholesale sales

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Define the Quaternary Sector of the Economy

The quaternary sector of the economy consists of intellectual activities that usually require more qualifications and development and have more of a risk factor in association with other people. Activities associated with this sector include government, culture, libraries, scientific research, education, and information technology.

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Define Economics

Economics is ‘a science that deals with the use of limited or scarce resources for the purpose of fulfilling society’s needs and wants.

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Define Opportunity Cost

Opportunity Cost is:

1. The sacrifice of some of one product to produce more of the other.
2. What you give up to produce more of another product.

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Define Profit

Profit is the money made by a business or person when the costs of doing business are taken out.

Every business needs to maximise profit in order to keep the business running. Decrease costs to increase profit amounts.

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Define wage

Wage is a payment received on an hourly basis or hourly rate

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Define Salary

Salary:
Monthly or Yearly Payments
Money paid to an employee on a yearly basis.
Benefits: know your pay guarantee

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Describe the Small Circular Flow of Income

Four points about this…

The Small Circular Flow of Income is:

People giving human resources/labour to factories/firms
Factories/firms in exchange they pay these labourers
The labourers’ incomes are spent on final goods and services.
Final goods and services are sold to the community of workers.

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What are the four factors of production?

Land, Labour, Capital and Enterprise

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What is Land?

Give examples.

The natural resources that are used to produce the final good
Examples:
Iron Ore
Trees

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What is labour?

Give examples.

The workers or labourers that work in several ways, to produce the final good.
Examples:
Tree Cutter
Truck Driver
Miner
Sawmill Worker
Assemblers
Shopkeeper
Welder
etc. etc. etc.

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What is capital?

The tools and machinery used by the labourers to produce the final good.

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What is Enterprise?

Give some examples

The entrepreneur or CEO of the company, or whoever owns or came up with the idea for that company.
Examples:
Yamaha= Torakusu Yamaha
Apple Inc.= Steve Jobs

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Define goods

Give some examples

Goods - Physical objects which you can see, touch or pick up Eg; computer, book, chair
Something that is produced and sold in the economy

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Define services

Give some examples

Services - Non-physical item that can be purchased Eg: getting a haircut, posting a letter

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Define free goods

Give some examples

Free Goods - goods are free because they are not scarce Eg: air, sunshine

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Define Consumer Goods

Give some examples

Consumer Goods- goods which households buy to directly satisfy individual needs and wants
Eg. Food

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Define Consumer durable goods | Give some examples

Consumer durable goods are goods which last a long time | Eg. Car, TV

Define consumer non-durable goods | Give some examples

goods which are consumed quickly | Eg. Food, fuel

Define capital/producer goods | Give some examples

goods used to make other goods | Eg. machinery, tools used in the production process.

Complementary Goods are...

goods which, at the time of purchase, lead to the purchase of another. For example: You buy coffee, you get cake Buy a car, you need fuel Buy a computer, you need to buy a charger

Substitute Goods are...

``` purchase of another good in place of a previous one due to price increase. Something that can be easily replaced by another. For example: - iPhone and Samsung - Twisties and Cheesels - Coke and Pepsi ```

Give a substitute and complementary good for butter

Margarine and jam

Give a substitute and complementary good for a newspaper

Magazine and glasses or coffee

Give a substitute and complementary good for a car

Bike and Helmet

What are the 8 types of earned income?

``` CRISPFWD Commission Rent Interest Salary Profit Fees Wage Dividend ```

What type of earned income does an architect receive?

Salary

What type of earned income does a teacher receive?

Salary

What type of earned income does a Doctor receive?

Fees or Salary

What type of earned income does a Factory Worker receive?

Wage or Salary

What type of earned income does a hairdresser receive?

Fees

What type of earned income does an owner of an office building receive?

Rent

What type of earned income does a shop assistant receive?

Wage

What type of earned income does a carpenter receive?

Fees

What type of earned income does a lawyer receive?

Fees or Commission

What type of earned income does a builder receive?

Wage or Salary

What types of earned income does a car salesperson receive?

Commission

What type of earned income does a banker receive?

Salary

What is Incorporated Perpetual Succession?

When the original owner of the company dies and someone else takes it on. Or when the company is bigger than the CEO Eg. Jim's Mowing Business

What is the simple definition for the primary sector of the economy?

The Land Resources harvested or extracted

What is the simple definition for the secondary sector of the economy?

Transformation of the primary products

What is the simple definition for the tertiary sector of the economy?

Basic Services Service Industry Minimal Training/Knowledge/Qualifications

What is the simple definition for the quaternary sector of the economy?

- Highly skilled/knowledge based services | - More training and experience required.

What are some marketing methods?

``` Market research Packaging Sales promotions Advertising Distribution ```

What are the two types of advertising?

Informative and Persuasive Advertising

What is informative advertising?

- Words - Where to buy- costs - What it can do-uses

What is persuasive advertising?

- Convincing | - Emotional and Visual- More Pictures- fewer words

What are individual wants?

Wants desired by a person for themselves Eg. a new bike Eg. a new car

What are collective wants?

are wants desired by the whole community and the goods and services to produce these are provided by the government Eg: footpaths, rubbish disposals and swimming pools OR in short- wants of the community

Define consumers

is the person who uses goods and services to satisfy their wants.

Define producers

Firms/companies making goods and services

Describe a SOLE TRADER | Include advantages and disadvantages of a sole trader

A sole trader is a company consisting of a single person Advantages: - In control of the management and finance- you get all the money - Go with your opinion/decision Disadvantages: - Unlimited Liability- personal assets are at risk - Only have your sources- more responsibilities $$ - The business suffers when you are enable to help$$ sickness - No other input and skills

Describe a PARTNERSHIP including advantages and disadvantages of a partnership.

A company consisting of 2-4 people. Advantages: - Partnership Agreement- less expensive for the individual- equal role in management - More opinions and POV Disadvantages: - Has to be lodged with the law - Profits are distributed$$ - Losses are divided- responsibilities - Unlimited liability- assets at risk

Describe a private company | Include advantages and disadvantages

A private company is the company that has between 1-50 and is the most common. These owners contribute $$$ and buy shares, which are given to them in a mini-salary/dividend - Invited owners only - Pty. Ltd. Proprietary/Private and Limited liability- personal assets are not at risk - ONLY INVITED OWNERS CAN BUY/INVEST IN A % SHARE

Describe public companies | Include advantages and disadvantages

A Public Company - listed on stock exchange - Can raise $$$ selling to the public - Limited Liability- assets not at risk - Produce an annual report for current and potential shareholder - you get a mini-salary/dividend if you invest - ANYONE CAN BUY/INVEST$$$ IN A % SHARE

Economics Revision Flashcards

(62 cards)