Outcome 1 Flashcards
(22 cards)
What is scarcity?
Limited resources to satisfy unlimited wants and needs
What are the differences between needs and wants?
Needs are necessities we need in order to survive and prosper. What’s are luxury items that could increase of standard of living.
Agents engaged in economic activity and there roles;
Individuals; purchase products which fuel the economy
Governments; profit from tax and impose restrictions
Business; generates activity and employment
What is a market?
Where buyers and sellers of goods and services come together in exchange.
What is economics?
The study of how scarce resources are allocated in an economy by public and private sectors.
What is opportunity cost?
The benefit foregone when choosing one alternative over another eg. Eating an apple instead of a banana when the options are out of apples, pears and bananas.
What are the types of resources? What are some examples of each?
Land; natural resources eg. Timber and farmland
Labour; human efforts eg. Coal miners, farmers
Capital; combination of land and labour like machines eg. Machines, equiptment, vehicles
What is a production possibility curve?
The curve that shows the maximum production possibilities available when all resources are fully efficiently employed. It measures efficiency.
Describe features of the ppc; (4)
Any point inside has wastage
Any point outside is impossible unless efficiency gains through tech
Anywhere along the curve is productive efficiency
Moving along the curve shows the opportunity cost
What is productivity?
The volume of output that is produced given the amount of input. (Resources)
What is the difference between allocative and productive/ technical efficiency?
Productive efficiency is when a nations resources are producing the maximum amount possible and at the lowest cost. Allocative efficiency is when a nations resources are allocated in combinations that provide maximum benefits for consumers and the nation (and less waste).
What are the three economic questions?
What and how much to produce
How to produce
For whom to produce
What is rationality?
Consumers are motivated by and make decisions based on self interest
What is social utility, total utility and marginal utility?
Social utility; the benefit to the community as a whole which may come at a cost to the individual
Total utility; total benefit or usefulness from choices
Marginal utility; the amount of extra satisfaction gained from consumers additional goods and services.
What is conspicuous consumption?
A way to demonstrate high status through the consumption of expensive things
What is a Veblen good?
Good where the demand tends to rise as the price increases
What is over confidence or irrational optimism?
Over confidence in their ability to control themselves on the future or overestimate the likely hood of positive outcome in the future.
Explain the circular flow of business and consumers;
Business supplies goods and service for demand
Consumers spend money
Business supplies money in wages
consumers supply labour to meet business
Determine the difference between traditional and behavioural economics;
Traditional- makes assumptions on consumers making rational decisions that will benefit them
Behavioural- the idea that people don’t always make rational decisions and consider people’s psychological factors in making decisions
What are internal factors?
Personality types, ethics and habit.
What are external factors?
Culture, marketing and government
Explain utility maximisation and budget constraints;
Consumers want to maximise their total utility and have relatively good prices for what they consume.
