T1 - 1.1 Nature of Economics Flashcards
What are goods?
A tangible item that can be bought, sold and lent.
What are services?
Non tangible items that provide a action of sort. For example - a train journey.
What is Elasticity?
a change in behaviour based on a change in price/income
What is a model?
A model is a theoretical concept that looks at how different variables interact
What is a subsidy?
Alternative products offered at a lower price
What is outsourcing?
getting labour from abroad
What is ‘Ceteris paribus’
‘All other factors remain the same.’
What are complementary goods?
Goods that are bought together. When demand falls for one, the demand falls for the other too. E.g. toothbrush and toothpaste
What is a Sunk Cost?
Money that is wasted
What is opportunity cost?
The cost of a foregone opportunity
What is a positive statement?
A statement that can be proven using facts - objective
What is a normative statement?
A statement that is based on judgement and opinions - subjective
What is the Economic Problem?
There is not enough resources for everyone due to scarcity. So the government can’t produce as much benefit and utility.
What is a government trade off?
E.g. The gov may need to focus on the older population rather than the younger.
What is a business trade off?
E.g. a business may choose to be sustainable rather than maximise profits.
Who are economic agents?
Individuals, firms and governments that partake in economic activity, the demand for and supply of goods and services.
What is a free market?
A market with limited restriction from the government
What is a command economy?
A market that is restricted by the government. E.g. PRNK
What is a mixed economy?
A market with a balance of limited and restricted intervention from the government.