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Economics Year 11 > Introduction to economics > Flashcards

Introduction to economics Flashcards

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1
Q

What is economics?

A

Economics is a social science concerned with the economic problem

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2
Q

What is the economic issue?

A

Unlimited wants, limited resources, must make choices between wants

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3
Q

Four basic questions of every economy

A

What to produce
How much to produce
How to produce
How to distribute production

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4
Q

What is opportunity cost?

A

When ever we choose ot produce or consume one product, we miss out on an alternative product, this is known as opportunity cost

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5
Q

What’s a production possibility frontier?

A

A PPF is a graphical demonstration of the possible production possiblities of two alternative goods

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6
Q

What Does it Mean When a PPF Can Shift?

A

A PPF shifts when there is an improvement or decline in production capabilities

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7
Q

What Does it Mean When a PPF Can Pivot?

A

A PPF pivot happens when only one sector improves while the other remains unchanged

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8
Q

What are individual wants?

A

Individual wants: Are desires by each person and are affected by individual tastes and preferences.

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9
Q

What are collective wants?

A

Collective wants: Are demanded by a community as a whole.

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10
Q

What’s a consumer good?

A

Consumer good: Goods that are produced for immediate consumption/utility of community needs/wants
Immediate utility

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11
Q

What’s a capital good?

A

Capital goods: Goods that are not produced for immediate consumption, but, instead contribute to the production of another good.
Building for the future

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12
Q

Factors contributing to an individuals economic decisions

A

Income, spending vs. saving, education, future earning potential.

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13
Q

Factors contributing to a business economic decisions

A

Pricing, profit vs. market share, production costs, reinvestment, quality control.

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14
Q

Factors contributing to a governments economic decision

A

Taxation vs. spending, economic growth, employment, policy decisions

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15
Q

What is GDP?

A

Gross domestic product is the total market value of goods and services produced by an economy in a year

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16
Q

What is GDP per capita?

A

The value of GDP per person

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17
Q

What is the business cycle?

A

The business cycle refers to the flunctuation in the levels of econmic growth

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18
Q

What are the characteristics of expansion?

A

Increased consumption, inflation, jobs, investment, government expenditure

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19
Q

Whats the role of indiviudals in an economy?

A

Provide labour, consume goods and services

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20
Q

Whats the role of business in an economy?

A

Produce goods and services

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21
Q

Whats the role of financial institutions in an economy?

A

Act as an intermidery between borrowers and spenders

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22
Q

What is the role of a government in an economy?

A

Redistribute income through tax and spending

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23
Q

Whats an injection?

A

Monetary flow that boosts economic activity

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24
Q

Whats a leakage?

A

Monetary flow which reduces economic activity

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25
Whats a command economy?
Government makes economic decisions
26
Whats a mixed economy?
A combination of market forces and government intervention
27
Whats a market economy?
Minimal government intervention
28
Whats a developing economy?
Low material wellbeing and economic development
29
Whats an emerging economy
Economy at its fastest rate of growth
30
Whats an advanced economy?
Developed high income economy weith stable growth
31
Whats HDI?
Human development index measures life expectency, education and living standards
32
Why is the income inequality and how do you measure it?
Because of the ecompetitive nature of a market ecnomy and you measure it with a Gini coefficent
33
What is aggregate demand?
The total demand for finished goods or services in an economy in a given time
34
What is the aggregate demand formula?
AD = C + I + G + (X - M)
35
What is the equilibrium formula?
S + T + M = I + G + X
36
What is consumer soverignty?
Consumers exercise their freedom to chose what G&S they want to buy.
37
What else does consumer soverignty determine?
The allocation of the factors of production.
38
What factors influence consumer soverignty?
Marketing Misleading or deceptive conduct Planned obselescense Anti competitive behaviour
39
What is the income formula?
Y = C + S
40
What is APC?
Average propensity to consume is the proportion of income spent on consumption
41
What is APS?
Average propensity to save is the proportion of income which is saved for future consumption
42
What is the APC formula?
APC = C/Y
43
What is the APS formula?
APS = S/Y
44
What does marginal mean?
Extra
45
What is MPC? and whats its formula?
Marginal propensity to consume - changeInC/ChangeInY
46
What is MPS? and whats its formula?
Marginal propensity to save - ChangeInS/ChangeInY
47
What are the factors influencing consumer choice?
The level of income The price of a good or service The price of substitute goods The price of compliment good Consumer taste Marketing and advertising
48
What does a firm sector do?
A healthy firms sector, is nessecary for the provision of both individual consupmtion and public goods and services
49
What is the key consideration of how to produce?
What combination of the factors of production are most efficent
50
What are the goals of the firm sector?
Maxamise profits Please shareholders Maxamise growth Satisficing behaviour increase in productive capacity Large tax base more employment opportunities
51
What is the productivity formula?
Output/Input
52
What is productivity?
Total quantity of goods and services an economy can prdouce with a given number of inpuits
53
54
Whats an expansion?
Economy showing positive growth
55
What is a contraction?
Economy showing negative growth
56
Whats a peak?
Economy reaches maximum for given economic conditions
57
What is a recession?
2-3 months of negative growth
58
What is the lowest part of a business cycle?
Trough
59
What is the pattern of economic activity called in a business cycle?
Cyclical
60
Characteristics of expansion
Increased consumption Increased inflation Increased Jobs Incredased government expenditure Increased investment Increased income
61
Characteristics of contraction
Decreased consumption Decreased inflation Decreased investment Increased unemployment rate decreased standard of living Less goods and services produced
62
What are internal economies of scale?
Cost savings a business gains as it grow larger. These savings continue until technical optimum
63
Advantages of internal economies of scale
Specilization Bulk purhcasing easier acsess to capital Investment
64
Whats internal diseconmies of scale?
When a business grows to big and starts experiancing higher costs than savings.
65
What are the causes of internal diseconomies of scale?
Management inefficencies Loss of employee motivation Coordination issues Administrive costs
66
What are external economies of scale?
Cost savings from favourable external conditions
67
Key factors of external econimies of scale
Localisation (Silicon valley) Shared industry improvments Easier acsess to funding
68
What are external diseconimies of scale?
Growth of an industry causes more costs for a business than savings
69
Causes of external diseconomies of scale
Too many business in one area Infastructure strain Increased demand for resources
70
What is specalisation?
Focusing on one task to get really good at it, helps to produce more with less effort.
71
What is industry specilisation?
Business make similar products group together in the same area to share resources
72
What is production at scale?
Making products in large quantitys improves efficency
73
factors affecting contemporary business
Ethical decision making Production method Cost Investment, profit, output
74
Factors affecting spending or saving
Income levels Cultural factors Confidence in the economy Life stage government policy access to credit MPS-MPC
75
What are the sources of consumer income?
Return on factors of production Wages from labour Rent from land Intrest from capital Profit from entreprenerual skills
76
What are the Factors influencing consumer choice?
Level of income Price of good or service price of substitute good price of compliment good consumer taste
77
Whats a firm?
A firm or business is an organisation involved in using entrepernureal skills to combine factors of production to produce goods and services
78
What are the Challenges of how much to produce?
Purchase too much, goods soil Purchase too little, cant keep up with demand Lack of access to capital
79
Considerations of how to produce
What combination of factors of production is most efficent

Economics Year 11 (2 decks)

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