T1 - 1.1 Nature of Economics Flashcards

1
Q

What are goods?

A

A tangible item that can be bought, sold and lent.

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2
Q

What are services?

A

Non tangible items that provide a action of sort. For example - a train journey.

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3
Q

What is Elasticity?

A

a change in behaviour based on a change in price/income

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4
Q

What is a model?

A

A model is a theoretical concept that looks at how different variables interact

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5
Q

What is a subsidy?

A

Alternative products offered at a lower price

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6
Q

What is outsourcing?

A

getting labour from abroad

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7
Q

What is ‘Ceteris paribus’

A

‘All other factors remain the same.’

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8
Q

What are complementary goods?

A

Goods that are bought together. When demand falls for one, the demand falls for the other too. E.g. toothbrush and toothpaste

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9
Q

What is a Sunk Cost?

A

Money that is wasted

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10
Q

What is opportunity cost?

A

The cost of a foregone opportunity

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11
Q

What is a positive statement?

A

A statement that can be proven using facts - objective

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12
Q

What is a normative statement?

A

A statement that is based on judgement and opinions - subjective

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13
Q

What is the Economic Problem?

A

There is not enough resources for everyone due to scarcity. So the government can’t produce as much benefit and utility.

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14
Q

What is a government trade off?

A

E.g. The gov may need to focus on the older population rather than the younger.

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15
Q

What is a business trade off?

A

E.g. a business may choose to be sustainable rather than maximise profits.

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16
Q

Who are economic agents?

A

Individuals, firms and governments that partake in economic activity, the demand for and supply of goods and services.

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17
Q

What is a free market?

A

A market with limited restriction from the government

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18
Q

What is a command economy?

A

A market that is restricted by the government. E.g. PRNK

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19
Q

What is a mixed economy?

A

A market with a balance of limited and restricted intervention from the government.

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20
Q

Choice

A

The ability of a consumer or producer to decide which good, service or resource to purchase or provide from a range of possible options.

21
Q

What are the 4 factors of Production?

A

Land, Labour, Capital and Enterprise

22
Q

What is austerity?

A

the name used for government fiscal policy which is aimed at reducing a government’s deficit (or borrowing).

23
Q

What is the production possibility frontier?

A

The production possibility frontier (PPF) is a curve on a graph that illustrates the possible quantities that can be produced of two products if both depend upon the same finite resource for their manufacture.
E.g. As the output of good X increases that of good Y decreases and vice versa.

24
Q

What is a capital good?

A

Goods that produce a stream of income in the future. E.g. machinery

25
Q

What is a consumption good?

A

Goods that produce an immediate benefit to the consumer. E.g. a car for personal use

26
Q

What is a consumer good?

A

Goods that you derive personal benefit from

27
Q

What is marginal?

A

The cost of adding on additional unit

28
Q

What is a movement?

A

A change in the combination of outputs due to price

29
Q

What is a shift?

A

An Increase/Decrease in the curve caused by FOP

30
Q

What is structural unemployment?

A

When the industry becomes obsolete, decline of the sector

31
Q

What is frictional unemployment?

A

time between moving jobs or time spent training for a new job

32
Q

What is cyclical unemployment?

A

Employment based on the economic cycle. E.g. the airline industry

33
Q

What is seasonal unemployment?

A

Employment depending on time of year. E.g. Farmer (Harvest)

34
Q

Examples of barriers?

A

Legislation, tariffs, quotas, embargoes ad protectionist measures.

35
Q

What is specialisation?

A

The process where a company or firm will focus their labour on a specific type of production.

36
Q

When does specialisation occur?

A

When economic units such as individuals, firms, regions or countries concentrate on producing specific goods or services.

37
Q

What is the division of labour?

A

Specialised use of workers in an organisation

38
Q

What is a bottleneck?

A

A point of congestion in a production system that slows or stops process

39
Q

What are bond markets?

A

The collective name given to all trades and issues of debt securities

40
Q

What are some problems with the division of labour?

A
  • Work can be monotonous
  • Leads to issues with the workforce such as a high absenteeism and labour turnover.
41
Q

What is money?

A
  • a medium of exchange
  • a store of value
  • a unit of account
  • a standard of deferred payment
42
Q

What are market forces?

A

SUPPLY and DEMAND
- work together to determine what price and quantity of goods and service are supplied(market mechanism)

43
Q

What s competitive pricing?

A

Set the same price as competitors

44
Q

What is price penetration?

A

Low price to begin with, then build up the price as you establish a customer base

45
Q

What is price skimming?

A

High price of begin with, then reduce the price over time to capture more customers

46
Q

What is loss leader?

A

Customer goes to the store for the cheap item and buys more than intended

47
Q

What is meritocracy?

A

The best person gets the best job

48
Q

What is a demerit good?

A

A good that is deemed to be bad for society but is over provided by the market