FOP, PPC's, Economies, Division of labour & specialisation, margins- TB Flashcards Preview

A-Level Economics Year 1 > FOP, PPC's, Economies, Division of labour & specialisation, margins- TB > Flashcards

Flashcards in FOP, PPC's, Economies, Division of labour & specialisation, margins- TB Deck (32)
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1
Q

What is scarcity?

A

When demand for a resource is greater than supply as resources are limited

2
Q

What is an economic good?

A

Goods that are scarce

3
Q

What is a free good?

A

Good that aren’t regarded as scarce (sea water)

4
Q

What are wants and what are needs?

A

Wants= Non-essential desires
Needs= Things essential for human survival

5
Q

What are the 3 economic agents?

A

Households (individuals), government and firms/ businesses

6
Q

What is rationality?

A

Economic agents acting in their best interests

7
Q

What is utility?

A

The benefit derived from the consumption of a good or service

8
Q

What are the 4 factors of production?

A

Land, Labour, Capital and Enterprise

9
Q

What are the rewards for each factor of production?

A

Land= rent
Labour= wages
Capital= interest
Enterprise= profit

10
Q

What is a positive statement?

A

A statement about what IS

11
Q

What is a normative statement?

A

A statement involving a value judgement about what OUGHT TO BE

12
Q

What is a value judgement?

A

A statement based on your opinions/ beliefs rather than facts

13
Q

What is a trade-off?

A

Exchange something of value, especially as part of a compromise

14
Q

What is opportunity cost?

A

The loss of other alternatives when one alternative is chosen

15
Q

What does a PPC show?

A

The maximum amount of two economic goods that can be produced using the same amount of materials

16
Q

What could cause a shift outwards in a PPC curve?

A

Improved technology, improved quality or quantity of any FOP

17
Q

What could cause a shift inwards in a PPC curve?

A

Natural disaster, worsened quality or quantity of any FOP

18
Q

What is a market economy?

A

Where market forces are allowed to guide the allocation of resource within a society (e.g. Taiwan)

19
Q

What is a centrally planned economy?

A

Where the government guides resource allocation within a society (e.g. North Korea)

20
Q

What is a mixed economy?

A

Where a combination of market forces and government guides the allocation of resources within a society

21
Q

What is the invisible hand?

A

A term from Alan Smith to describe the way that resources are allocated in a market economy

22
Q

What is specialisation?

A

Concentrating on a task or activity in order to become an expert in it- more efficient and beneficial for economic agents

23
Q

What is the division of labour?

A

Where the production is broken down into a sequence of stages and workers are assigned specific stages

24
Q

What is a barter system?

A

An economy without money so that transactions in goods and services rely on direct exchange

25
Q

What is money a medium of?

A

Exchange

26
Q

3 Specialisation advantages?

A

1) More everything (profit, pay, output etc.)
2) Tackles scarcity
3) Allows trade

27
Q

3 Specialisation disadvantages?

A

1) Dull for workers
2) Inflexibility
3) Dangerous for countries (overspecialisation)

28
Q

What is marginal utility?

A

Additional utility gained from consuming one extra unit of a good or service

29
Q

What is the law of diminishing utility?

A

The more units consumed, the less utility gained from them

30
Q

What are 3 reasons the marginal concept is useful in decision making?

A

1) Allows gvnmt to make incremental improvements to spending decisions
2) Allows firms to decide when to stop increasing production
3) Allows households to decide when to stop consumption and when to offer more labour

31
Q

What are 3 reasons the marginal concept isn’t useful in decision making?

A

1) Gvnmt need to make large changes too
2) Firms are unlikely to have the info needed to calculate values ex ante, so only can ex post
3) Households don’t have knowledge to process these decisions

32
Q

What does 1) ‘ex ante’ & 2) ‘ex post’ mean?

A

1) Before decision
2) After decision