mock revision

Question 1

what are the factors of production

Answer 1

land
labour
capital
enterprise

Question 2

what is opportunity cost

Answer 2

cost of giving up the best alternative when a choice is made

Question 3

what is division of labour

Answer 3

specialisation of individuals in a work force

Question 4

what are the advantages and disadvantages in the division of labour

Answer 4

advantages :
gain skill 
more productive
more cost effective 
quicker 
disadvantages:
no sense of ownership
quality issues
boredom of workers

Question 5

what is demand

Answer 5

quantity of a good or services that consumers are able and willing to buy at various prices

Question 6

what are the conditions of demand

Answer 6

change in population
change in disposable income
price and availability of other goods
change in taste and preferences

Question 7

what is consumer surplus

Answer 7

difference between what consumers are willing to pay and the price they actually pay

Question 8

what is producer surplus

Answer 8

difference between what sellers are willing to sell product for and the price they actually do sell them for

Question 9

what is supply

Answer 9

quantity of a good that suppliers are able and willing to sell at any given price

Question 10

what shifts supply

Answer 10

change in cost of production
change in technology
change in price of substitutes
government tax

Question 11

what are complements

Answer 11

goods which are demanded together

a rise in the quantity demanded of one will lead to an increase in demand for another

Question 12

what are substitutes

Answer 12

goods which replace each other

rise in price of one will lead to rise in demand for another

Question 13

what is derived demand

Answer 13

goods that are demanded for production of other goods

Question 14

what is composite demand

Answer 14

goods which are demanded for two or more purposes

Question 15

what is joint supply

Answer 15

one good supplied for two different purposes

Question 16

what is PED

Answer 16

price elasticity of demand measures responsiveness to demand after a change in price

Question 17

what is the equation of PED

Answer 17

% change in quantity demanded / % change in price

Question 18

what is the elasticity of a product if its PED is between 0-1

Answer 18

inelastic

Question 19

what is the elasticity of a product if its PED is more than 1

Answer 19

elastic

Question 20

what is YED

Answer 20

measures responsiveness of demand to a change in income

Question 21

what is the equation of YED

Answer 21

% change in quantity demands / % change in income

Question 22

what is a normal good

Answer 22

brought more of when income goes up

Question 23

what YED do normal goods have

Answer 23

positive between 0 -1

Question 24

what has a YED of above 1

Answer 24

luxury goods

Question 25

what YED do inferior goods have

Answer 25

negative yed

Question 26

what is XED

Answer 26

measures demand for one good in responsive to a change in price of another good

Question 27

what is the equation for XED

Answer 27

% change in quantity demanded for good X / % change in price of good Y

Question 28

What XED do substitutes have

Answer 28

positive

Question 29

what XED does complements have

Answer 29

negative

Question 30

if XED is positive and more than 1 they are?

Answer 30

strong substitutes

Question 31

if XED is negative and less than -1 they are?

Answer 31

weak complements

Question 32

why is the demand curve for labour downward sloping

Answer 32

as wage rate rises firms will cut back on employment

Question 33

what causes a shift in demand for labour

Answer 33

``` changes in productivity changes in revenue by a firm rise in customer demand change in price of good employment subsidy ```

Question 34

what does the elasticity of labour depend on

Answer 34

time -the longer the time the easier to substitute labour for capital labour costs as % of total costs ease and cost of factor substitution PED

Question 35

why is the supply curve for labour backward sloping

Answer 35

at high levels of income workers prefer to work shorter hours rather than receiving extra income

Question 36

what does the elasticity of labour depend on

Answer 36

time - elasticity lower in short run availability of suitable labour - easier to get unskilled workers unemployment

Question 37

what are the withdrawals from the circular flow

Answer 37

savings tax imports

Question 38

what are the injections from the circular flow

Answer 38

investment government spending exports

Question 39

what is aggregate demand

Answer 39

total of all demand curves in the economy

Question 40

what is AD made up of

Answer 40

consumption investment government spending net exports (exports - imports)

Question 41

what causes shift in the AD curve

Answer 41

change in any variable of ad | eg . unemployment cuts consumption

Question 42

what is aggregate supply

Answer 42

total of all supply curves in the economy

Question 43

what causes shifts in the short run AS curve

Answer 43

``` wage rates raw material prices taxation exchange rate productivity ```

Question 44

what causes shifts in the long run AS curve

Answer 44

``` technological advances productivity in competing economies change in skill and education demographic changes competition policy ```