Slattery

Question 1

Ceteris paribus

Answer 1

‘All other things being equal’

The effect of one economic variable on another (assuming everything else stays the same)

Question 2

Normative statement

Answer 2

Those which are value based and involve opinions. E.g. ‘I think’

Question 3

Positive statement

Answer 3

A statement supported with evidence and facts

Question 4

PPF 1

Answer 4

Shows the maximum combination of output assume all resources are fully utilised
In order to change what is produced there will be an opportunity cost
Line on graph not curve

See notes for diagram

Question 5

PPF 2

Answer 5

Impossible to shift curve on graph up unless FOP increase
PPF can shift inwards if we start to lose some/all FOP

See notes for graphs

Question 6

How to increase FOP

Answer 6

Increasing the FOP

Develop pre existing FOP

Question 7

Types of economies

Answer 7

Centralised- resources allocated by the government
Free market economies- The market looks after itself (Laissez faire)
Mixed economy- free market with some government intervention
Traditional- subsistence farming and localised trade/swapping

Question 8

Consumer surplus

Answer 8

The difference between the total amount that customers are willing and to pay and the total amount they actually pay (market price)

See notes for graph

Question 9

Producer surplus

Answer 9

The difference between the amount the producer is willing to sell at and the actual amount they receive

Question 10

Negative externalities

Answer 10

When a third-party is negatively affected by a market transaction 

Check notes for graph
Graph looks like crocodile mouth at top

Question 11

Absolute advantage

Answer 11

Being able to produce more of something that another country (assuming both have the same amount of resources/FOP available)

Question 12

Comparative advantage

Answer 12

Being able to produce something at a much lower opportunity cost in another country (all FOP are equal)

Question 13

Problems with specialisation

Answer 13

If specialisation goes wrong, everyone is out of a job
Lack of diversity in the area
Often causes regional decline

Question 14

Division of labour

Answer 14

Specialisation of labour into separate tasks

Higher productivity per worker

Question 15

2 ad + 2 dis division of labour

Answer 15

Advantages-
Increase in sales
Lower cost per unit
Disadvantages-
Boredom in workforce due to repetitiveness 
Employ more staff

Question 16

Positive externalities

Answer 16

When a third-party is positively affected by a market transaction

Check notes for graph
Graph looks like crocodile at the BOTTOM

Question 17

Flat tax

Answer 17

a tax system that applies a single tax rate to all levels of income.
Imposed on firms, but can be passed on through higher prices

See notes for graph
Graph has 2x supply lines with 3x price lines (p,p1,p2)

Question 18

2 ad 2 dis of flat tax

Answer 18

Advantages-
May prevent people from buying the product
Brings tax income to the government
Disadvantages 
Smuggling/black market
Low income people suffer