The Economy Flashcards
(31 cards)
What is economics?
the study of decisions, outcomes and activities that occur as a result of scarcity of resources.
How society uses limited resources to satisfy unlimited needs and wants.
Goods
Tangible objects
can be used, stored, taken home, evaluated or consumed.
Services
Intangible properties
the receiver doesn’t get a physical item/receive ownership
The economic problem
Scarcity
People have unlimited wants but limited resources
Needs
The essentials; the basics of life we can’t live without.
, food, water, shelter, health care
Wants
Good standard of living; things we don’t need to survive.
, phones, cars, tv’s
Economic resources
3; natural, labour, capital
Resources (factors of production)
Productive inputs that are required for businesses to make good and services.
Limited resources restrict national production.
Natural resources
Useful raw materials taken from the earth; minerals, plants, water
Occur naturally
Humans use and modify in beneficial ways
Capital
All equipment used by human labour in production; machinery, buildings, infrastructure.
Labour
Human work effort, physical and mental; teaching, carpentry, surgery
Enterprise
A specific skill used by people; initiative, drive, personal goals.
Used to start and maintain a business
Natural: Making a pizza?
Tomatoes and herbs.
Tomato comes from a plant and cannot be man-made
Labour: Making a pizza?
Chef/Cook
Chef makes the dough and sauce. Rolls out the dough, adds toppings and cooks it.
Distinguish between Need and Wants
The distinguishing factor between needs and wants is what is needed (ESSENTIAL) to survive.
Needs
The essentials we need to survive
Food and Water is essential for survival
Wants
Things that help us to have a good standard of living
a phone gives us the pleasure of connecting with other people.
Opportunity Cost
The value of the lost alternative.
The value of the resources that were not chosen.
- Apple vs. Orange
- Work or Shopping
Cost Benefit Analysis
the process of comparing the projected costs and benefits of a decision to determine its feasibility.
Markets
Any situation where potential buyers are in contact with potential sellers and there is a means of exchange.
A means of exchange is a way of paying for the goods and services that are traded.
Market Types
- Supermarket
- Ebay
- Fruit + Vege
- Black Market
The Basic Question
the problem of satisfying unlimited wants with limited resources means that any economy faces the following decisions.
- What to Produce?
- How to Produce?
- For Whom to Produce?
What to Produce?
- what do customers want?
- is there a gap in the market?
- what resources are available?
- can it be produced cheaper elsewhere?
- how much profit can I make?
How to Produce?
- use australian ingredients?
- fairtrade?
- robots or labour?
- where will it be made or provided?
:native or overseas
