microeconomics scarcity and choice vocab

Question 1

economics

Answer 1

the study of how societies allocate their scarce resources

Question 2

microeconomics

Answer 2

the study of the behaviour of individuals and groups within an economy

Question 3

scarcity

Answer 3

wants are unlimited/infinite bur resources are limited/finite

Question 4

factors of production

Answer 4

the resources used by firms in the production process. they are the inputs to the production process

Question 5

land

Answer 5

all the natural resources e.g. coal, forests, rivers, soil, minerals, sea. economic activity uses both renewable and non renewable resources - receive rent

Question 6

labour

Answer 6

workforce of the economy. the physical and mental effort expended by humans. the quality of each human is unique with different characteristics, skills, knowledge - receive wage

Question 7

capital

Answer 7

man made resources not wanted for their own sake but for what they contribute to output e.g. factories, machine - receive interest for their services

Question 8

enterprise

Answer 8

decision making and risk taking factor, the ability to bring all the factors of production together, take risks to - receive profit

Question 9

entrepreneur

Answer 9

develops the idea and organised the 3 factors of production, humans that take risks but not for wages

Question 10

want

Answer 10

we desire but can live without

Question 11

need

Answer 11

necessary to survive e.g. warmth, shelter, food, clothes, water

Question 12

economy

Answer 12

a system that seeks to deal with the basic economic problem and allocate scarce resources

Question 13

opportunity cost

Answer 13

the satisfaction lost from the next best alternative foregone

Question 14

free goods

Answer 14

a good that has no opportunity cost/doesn’t require a sacrifice

Question 15

prediction possibility frontier

Answer 15

a diagram that illustrates the maximum amount of one good that can be produced given a certain amount of another good, when all resources are being fully and efficiently utilised

Question 16

positive economics

Answer 16

dealing with the objective or scientific explanations of the working ‘economy’

Question 17

normative economics

Answer 17

dealing with prescriptions or recommendations based on personal value judgements (a state of opinion or beliefs)

Question 18

factor rewards

Answer 18

the incomes that flow to each of the main factors of production when there are brought into productive use

Question 19

market economy (capitalist system)

Answer 19

the factors of production are controlled and regulated by private businesses

Question 20

command economy (planned economy)

Answer 20

financial decisions are made according to government plans

Question 21

mixed economy

Answer 21

an economic system that combines elements of both capitalism and socialism

Question 22

economic goods

Answer 22

a good or service that has a benefit to society and satisfies human wants

Question 23

trade-off

Answer 23

any situation where making one choice means losing something else, usually forgoing a benefit or opportunity

Question 24

productivity

Answer 24

how much output can be produced with a given set of inputs

Question 25

economic problem

Answer 25

the fundamental problem facing all societies

Question 26

specialisation

Answer 26

a situation where individuals or firms or regions or nations concentrate upon producing a small range of goods and services

Question 27

division of labour

Answer 27

occurs when the production process of a good or service is divided into a number of individual operations and each operation is the special task of the worker

Question 28

subsistence economy

Answer 28

each individual produces enough to survive, no leisure and goods. seen in the past