IB Economics Unit 1 Flashcards
(22 cards)
Define economics (3)
social science
study of human society/behavior
how resources are allocated to satisfy people’s needs/wants
Define microeconomics (2)
behavior of individual decision-makers (consumers + producers) in economy
how they make choices, consequences of their choices, how their interactions determine price
Define macroeconomics (2)
study of economy as a whole
sum of individual units
Define scarcity
resources are insufficient to satisfy unlimited human desires
Define choice in economics
choices must be made to decide what to produce and what to be foregone
Define efficiency in economics (3)
making the best possible use of scarce resources to avoid waste
using the fewest possible resources to produce
allocative efficiency - using scarce resources to satisfy society’s needs + wants
Explain equity in economics
ensuring that people in a society receive similar outcomes through different treatment
Explain Economic well-being (3)
prosperity
economic satisfaction
standards of living
Explain sustainability in economics (2)
ability of present generation to satisfy its needs without limiting future generations ability to satisfy their own needs
using resources without reducing their quality + quantity over time
Explain change in economics (2)
economic theory - change from one situation to another caused by a change in variables
real-world - continuous technological, political, social change
Explain interdependence in economics
economic decision makers interact + depend on each other
Explain intervention in economics
government being involved with markets
Define Land as a FOP (2)
gifts of nature (natural resources
territory used for production
Define labour as a FOP
physical/mental effort that people contribute to production
Define capital as a FOP
man-made resource/FOp to produce goods/services
Define enterprise as a FOP (2)
risk-taking + decision making to innovate and run a business
organises other 3 FOPs
Define opportunity cost
the value of the next best alternative foregone
Assumptions of the PPC curve (2)
all resources are being fully used
all resources are used efficiently (lowest cost/best possible way to avoid waste)
Define PPC (2)
represents combination of maximum production level of 2 goods in an economy
given 2 assumptions
Constant opportunity cost for PPC (2)
linear PPC line
FOPs equally suited to production of both goods - cost remains the same
Changing oppotunity cost for PPC (2)
curved PPC line
FOPs are not equally suited to production of both goods
Factors that shift PPC (3)
changes in quantity of resources
changes in quality of resources
technological improvements
