T1

Question 1

What is opportunity cost? (plus an example)

Answer 1

The potential benefit lost by choosing one option over an other, e.g if you spend £100 on a football ticket the opportunity cost is what you could of spent the money on, e.g new shoes

Question 2

What is Ceteris Paribus?

Answer 2

Ceteris Paribus means with other conditions remaining the same, all things being equal

Question 3

What is the basic economic problem?

Answer 3

The problem of scarcity, human wants and needs are unlimited, but resources needed to satisfy are limited

Question 4

What are renewable and non-renewable resources?

Answer 4

Renewable resources are energy sources that can naturally replenish themselves, non-renewable resources are natural resources that are limited in quantity and cannot be replenished

Question 5

What are the four factors of production?

Answer 5

Land, Labour, Capital, Entrepreneur

Question 6

What are positive and normative statements and examples

Answer 6

Positive statements are factual statements, that are not opinion-based, e.g ‘if wages go down, demand for own-label supermarket foods will go up’. Normative statements are opinion-based, e.g ‘the minimum wage should be increased to reduce poverty’

Question 7

Definition of PPF curve and what it shows?

Answer 7

PPF = Production Possiblilty Frontier, which is a curve on a graph that illustrates the possible quantities that can be produced by two products

Question 8

What is Allocative efficiency?

Answer 8

Whether whats being used is satisfy the customer - cannot tell from PPF graph

Question 9

What is Pareto efficiency?

Answer 9

Nobody can be better off without someone worse off

Question 10

What is Productive efficiency?

Answer 10

Occurs when production is on the PPF curve