Economics SAC 1 revision

Question 1

Allocative efficiency

Answer 1

a market situation where the production of goods and services aligns perfectly with consumer demand

Question 2

Relative Scarcity

Answer 2

occurs when there is a shortage of a resource in one or more areas

Question 3

Opportunity Cost

Answer 3

the value of the best alternative you give up when you choose one option over another

Question 4

Macroeconomics

Answer 4

the study of how economies perform as a whole

Question 5

Microeconomics

Answer 5

the study of how individuals, businesses, and households make decisions about how to use limited resources

Question 6

Normative Economics

Answer 6

focuses on the value of economic fairness, or what the economy “should be” or “ought to be.”

Question 7

Positive Economics

Answer 7

the study of economics based on facts and data, rather than opinion

Question 8

3 basic economic questions

Answer 8

what to produce?, how to produce it?, and who to produce it for?

Question 9

PPC

Answer 9

a graph that visually represents the different combinations of two goods an economy can produce with its current resources

Question 10

Material and Non-material living standards

Answer 10

Material living standards include tangible goods and services, like cars, health coverage, while non-material living standards are harder to measure, since they’re made up of intangible things like environment, freedom of speech, free elections, crime rates, and time off work.

Question 11

Resources

Answer 11

Land – Natural resources like water, minerals, and forests used in production.
Labor – Human effort, skills, and time contributed to producing goods and services.
Capital – Man-made tools, machinery, and buildings used to produce goods and services.

Question 12

Customer sovereignty
(customer influence)

Answer 12

the idea that consumers hold the power to influence production decisions, based on what goods and services they purchase