Brainscape's Knowledge GenomeTM


Top Flashcards (Certified)
All Flashcards

Economics Term 1 Pre Q > Economics term one PreQ > Flashcards

Economics term one PreQ Flashcards

(80 cards)

Start Studying
1
Q

Basic economic problem

A

Scare resources + unlimited wants

how to allocate scare resrouces for unlimited wants

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Three questions to solve in the basic economic problem

A

WHAT to produce and in WHAT quantities
HOW to produce it with scarce resources
WHO to produce it for - which consumers

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What to produce

A

deciding what wants to satisfy

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

how to produce

A

means deicing what combination of factors of production you need to use

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

How is a want different from a need?

A

A need is essential eg water food
A want is something that would be nice to have but not essential

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What are consumer goods

A

Goods used by consumers to satisfy their wants and needs eg clothes food

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What are capital goods

A

Goods used by PRODUCERS to help them make other goods and services
eg machinery buildings equipment

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

what is a demand schedule

A

a TABLE which shows the range or prices and quantities emanded at each price

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Demand Curve - what are the axis ?

A

Price (vertical)
Quantity (horizontal) - how much consumers are willing to buy at the price

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What happens on a demand curve when demand INCREASES

A

the curve moves to the right
(demand increases and quality of goods sold increases as there is more demand)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Names some factors that could lead to an increased demand for goods eg apples

A
  1. advertising campaign
  2. Govt says eating apples is healthy
  3. consumers had a pay rise or a tax cut so have more spending money
    4 price of another fruit goes up so people prefer apples as cheaper compared to alternative fruits
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What does price elasticity measure ?

A

the responsiveness or sensitivity of the quantity demanded for a good or service compared to a change in its price

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

if a good has low elasticity of demand what does that mean

A

if the price changes for the good, there will be only a small impact on the quantity demanded of that good. Demand is NOT very responsive if price changes.
that means people will still buy similar quantity even if its more expensive eg petrol

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

if a good has HIGH elasticiy of demand what does that mean

A

if the price goes up people will buy much less. They are VERY sensitive or responsive to price change. eg Limes at $40 per kilo poeple buy one lime - drops to $10 per kilo and poeple buy lots

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

when demand is ELASTIC what happens to price

A

% change in quantity is greater than % change in price
example price drops by 10% but quantity sold increases by 20% - so MORE is sold and revenue increases.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What does it mean when the price is fixed for a moment in time

A

supply is perfectily inelastic - the supply line and price line are both vertical.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

what is a direct tax

A

tax directly on income

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

what is an indirect tax

A

a tax on goods that consumers have to pay like GST
its an extra cost to the producer

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

a market economic system is also called

A

a free market system - markets of producers and consumers decide what how and for whom

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

3 types of economies and examples

A

Planned (China North Korea Cuba)
Mixed (UK US Germany France
Free Market (NZ Canada Australia)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

in a planned economy who own the resources?

A

the government

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

3 advantages of planned economy

A
  1. reduced inquality
  2. more social welfare
  3. critical assets (power food) controlled by Govt for everyone
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

3 problems that can happen in a planned economy

A
  1. shortages and surpluses are common
  2. good can be poor quality
  3. very little choice or range of goods because govt decides what people need
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

3 disadvantages of Planned economy (also called a command economy)

A
  1. lack of competition and innovation
  2. lack of freedom of what to produce
  3. firms may produce things that are not profitable because told what to produce
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
what is a mixed economy
a mix of central authorities, firms and consumers combines govt planning with use of the free market
26
advantages a MIXED economy (a mix of central authorities, firms and consumers)
1. govt provided incentives for people to work so less unemployement 2. govt provides subsidies for critical industries eg farming power 3. some price controls 4. public services like roads health care and education can be provided for everyone
27
disadvantages of MIXED economy
1. the Govt cannot completely control the economy so things don't always go to plan because some of the economy is a free market 2. may have high taxes to pay for everything 3. there may be too many laws to control everything leading to over regulation and disincentives to producers
28
what is the main aim of a business in free market economy
to make as much money/profit as possible by producing quality products at reasonable prices
29
what is profit
everything left over once all the costs and expenses have been paid
30
Advantages of free market economy
1. customers have more choice 2. incentives to innovate and try to make profit 3. competition encourages innovation and new/better products
31
Disadvantage of free market economy
factors of production only used if can make a profit certain goods may not be produced people who earn more can get more
32
What is the law of demand
as price increases the quantity demanded decreases and vice versa ceteris paribus (all things being equal)
33
3 things that cause a SHIFT in demand
1. change in consumer INCOME 2. change in PRICE and AVAILABILITY of other goods (like subsititutes) 3. change in consumer TASTES 4. change in POPULATION - more people means increased demand
34
what are normal and inferior goods
normal goods that behave normally - so if have more income demand will go up inferior goods are cheap goods that if you earn more you would not buy eg clothes from the warehouse
35
what is a complementary good
goods consumed together so have joint demand eg jetski and lifejackets
36
What is disposable income
how much consumer has to spend after their tax has been paid
37
What is the law of supply
as the price of good or service increases, the quantity supplied will increase and vice versa, ceteris paribus (all things being equal)
38
5 factors than cause a shift in supply
1 change in COSTS of production MAIN FACTOR CHANGING SUPPLY 2. change in PRICE 3. change in TECHNOLOGY means easier to prduce more 4. change in business EXPECTATIONS like fear of a recession means produce less 5. GLOBAL factors like sanctions wars floods
39
what is opportunity cost
the next best alternative that had to be given up ie what could I have done or produced instead?? Its a sacrifice or trade off if i work more the opportunity cost is my leisure time i have given up if i work less the opportunity cost is the money i could have made If i go to university for 3 years the opportunity costs it eh 3 years money i would have made if i had got a job instead
40
why are wants not always fully satisfied.
limited resources to produce goods cannot make everything for everybody that they may want
41
4 factors of production
Capital Entreprenuership/Enterprise Labour Land (natural resources on and in and under the land)
42
2 types of costs producers face
Internal costs (inside their business) eg wages, cost of their building External costs eg transprot costs.
43
2 types of costs producers face
Internal costs (inside their business) eg wages, cost of their building External costs eg transport costs.
44
when supply increases then price will
decrease or fall
45
Land as a factor of production
is natural and can be improved by humans to be more valuable in production
46
what is an example of market failure
monopolies who make abnormal profits as no one can complete with them so they can charge what they like
47
why are some jobs poorly paid like street cleaners
because anyone can do it and it is unskilled
48
4 types of trade unions
WIGC Workers Union Industrial Union eg teachers General Union Craft Union
49
what is the opportunity cost for cars if the government builds more cycleways
demand for bikes will increase so demand for cars will drop
50
Advantages and disadvantages of free market economy
1. freedom of action by business 2. incentives to innovate and try to make profit consumers have more choice 1. unequal distribution of wealth
51
What is market price or equilibrium
where supply and demand curves meet - stable price and stable supply so no need to change
52
Price elasticity tell us
HOW MUCH demand will move in response to price change
53
a more vertical/steeper demand curve
means demand is INELASTIC demand changes LESS % than the % change in price eg milk pertrol bus to work
54
price elasticity means % change in price means
bigger % change in demand - ELASTIC smaller % change in demand - INELASTIC people will buy it even if more expensive
55
Price Elasticity of demand PED is measures by
a coefficient of demand % change in quantity demanded OVER % change in price
56
If PED is less than 1
demand is price inelastic
57
if PED is more than 1
demand is price elastic
58
what does a PED of 0.60 tell you
that for every 1% change in price, the quantity demanded falls by 0.60% price is inelastic as PED is less than 1
59
what does a PED of 1.75 tell you ?
that for every 1% change in price, the quantity demanded changes by 1.75% Price is elastic as PED is more than 1
60
what does a special vertical demand curve line tell you
the same quantity is demanded at every price demand is PERFECTY inelastic PED = 0
61
what does a special demand curve horizontal line tell you
any quantity can be demanded at the same price demand is perfectly elactic PED = infinity
62
special demand curve hyperbola
shows you that any % change in price has the SAME % change in quantity demanded demand is UNITARY elastic PED = 1
63
why does a popular brand have a lower PED (price elasticity) than a less well known brand
because people will still be loyal to the leading brand after a price rise so demand is impacted less by the price rise. Less likely to change to another brand even if price rises eg whitakers chocolate
64
Price Elasticity of SUpply or PES
how much the quantity supplied changes if the price changes
65
more vertical supply curve
supply is price INELASTIC PES less than 1 supply curve will go through the X (quantity) axis)
66
a flatter or more horizontal supply curve
supply is price ELASTIC PES more than 1 supply curve will go through the Y (price axis)
67
factors that effect PES or PRICE ELASTICITY OF SUPPLY
1. TIME - how long it takes ot get or make the goods 2. availability of resources 3.
68
becasue of scare recourses which have alternative uses
choices have to be made and what is given up is the opportunity cost
69
2 types of cost that result from a choice of what to make or build or do
Opportunity cost (your private cost of the choice) external cost (cost to others such as giving up peace and quiet or having pollution from new roads
70
examples of external Costs from a business choice
health costs to taxpayer for example if someone smokes beside you police and ambulance services giving up peace (loud roads loud music etc)
71
what is a PPC?
Production Possibilities Curve
72
what is a PPC?
Production Possibilities Curve
73
Opportunity cost can also be called
Lost opportunity - what did you miss out on because of your choice
74
what is on the axes of a PPC
X = Quantity of Good A Y = Quantity of Good B
75
What type of economy produces widest variety of goods and services
a free market economy
76
what could cause movement upwards along a supply curve ie more supply
better technology makes goods cheaper to produce so can produce more
77
3 types of industry
Primary Secondary Tertiary
78
what is market failure ?
insufficient distribution of good and services in the free market and it leads to lack of equilibrium
79
what is the function of money ?
a medium of exchange
80
what does a PPC show
the trade offs or opportunity costs of production between two goods

Economics Term 1 Pre Q (5 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions