introduction

Question 1

Industrial revolution

Answer 1

a wave of technological advances and organisational changes which transformed an agrarian and craft based economy into a commercial and industrial one

Question 2

Capitalism

Answer 2

economic system based on private property, markets and firms

Question 3

economic system

Answer 3

comprises institutions that organise production and distribution of goods and services

Question 4

institutions

Answer 4

comprise the laws and social customs governing the way people interact in society

Question 5

private property

Answer 5

you can enjoy your possessions, exclude others from their use and dispose of them by gift or sale

Question 6

private property in capitalism

Answer 6

private property of the means of production (capital goods)

Question 7

markets

Answer 7

way of connecting people who mutually benefit by exchanging goods and services through a process of buying and selling

Question 8

exchanges in markets are

Answer 8

reciprocated, unlike gifts and theft
voluntary, because the things being exchanged are private property
mutually benefitial

Question 9

demand side

Answer 9

the side of a market on which participants are offering money in return for some other good or service

Question 10

supply side

Answer 10

the side of the market on which participants are offering something in return for money

Question 11

firms

Answer 11

a way of organising production with the following characteristics:
*one or more individuals own the capital goods used in production
*owners pay wages and salaries to employees, and direct them in the production
*the firm’s output is the property of the firm’s owners and is sold on markets for profit

Question 12

labour market

Answer 12

employers are the demand side of the labour market, while employees are on the supply side

Question 13

capitalist transition towards firms has the following benefits:

Answer 13

*firms competing in markets had strong incentives to adopt and develop more productive technologies, helping the industrial revolution
*firms employing large numbers of workers allowed unprecedented specialisation, known as division of labour, in task and products

Question 14

law of comparative advantage

Answer 14

gains from trade follow from allowing an economy to specialise in those activities which the country is relatively better at, eventhough it may not have the absolute advantage in them

Question 15

economics

Answer 15

study of how people interact with each other and with their natural surroundings in producing their livelihoods, and how this changes over time