MICRO - LS1 - The Economics Problem

Question 1

Economics

Answer 1

The study of economy

Question 2

Economy

Answer 2

Goods & services produced in an area

Question 3

Good

Answer 3

Something tangible - can be touched and felt

Question 4

Service

Answer 4

Something intangible - can’t touch/feel

Question 5

An example of a good

Answer 5

Food

Question 6

An example of a service

Answer 6

Education

Question 7

Factors of production definition

Answer 7

The resources used to produce goods and services

Question 8

What are the 4 factors of production?

Answer 8

Capital, Enterprise, Land & Labour (CELL)

Question 9

Land definition

Answer 9

The natural resources available for production - known as natural capital

Question 10

Example of land

Answer 10

Oil, forests, land

Question 11

Labour definition

Answer 11

All work done by humans in production - quantity and quality of human input

Question 12

Labour examples

Answer 12

Engineer/lawyer

Question 13

Enterprise

Answer 13

Willingness of business people to take risks - they hope for profit by exploiting market opportunities

Question 14

Enterprise examples

Answer 14

Setting up of a business and re-investing

Question 15

Capital

Answer 15

Man-made goods used to make other goods services

Question 16

Capital examples

Answer 16

Machinery, equipment, software

Question 17

Renewable resources definition

Answer 17

There is no limit to them, they can be replaced

Question 18

Renewable resources examples

Answer 18

Solar, wind, fish stocks, oxygen

Question 19

Non-renewable resources

Answer 19

Limited, finite, have to dig to find

Question 20

Non-renewable resources examples

Answer 20

Coal, crude oil, natural gas

Question 21

The basic economic problem

Answer 21

How to use the available scarce resources to satisfy people’s infinite needs and wants as a effectively as possible

Question 22

3 main questions due to economic problem and who decides the answers

Answer 22

What to produce? —> businesses decide based on consumer demand
How to best produce it? —> businesses decide based on the most cost effective way
Whom to produce it for? —> consumers decide based on those who have income to afford it

Question 23

Economic agents definition

Answer 23

Groups who participate in the economy

Question 24

Producers

Answer 24

Create goods and services to sell - these are firms

Question 25

Firms

Answer 25

Businesses

Question 26

Consumers

Answer 26

Buy goods and services from firms (can be individuals and firms)

Question 27

Governments

Answer 27

Set rules other economic agents must follow(how they interact) and also produce goods/services

Question 28

Automation

Answer 28

Capital machinery and new tech used to replace/enhance human labour

Question 29

Capital-Labour substitution

Answer 29

Replacing Labour with machinery

Question 30

Opportunity cost

Answer 30

The cost of the next best alternative forgone when a choice is made