Topic 1 Revision

Question 1

What is transaction

Answer 1

the exchange of money for something in return

Question 2

What are the two different types of transaction

Answer 2

Indirect and Direct

Question 3

what is economics

Answer 3

the social study of how people and society choose to use their limited resources to satisfy their needs and unlimited wants

Question 4

what is an economy

Answer 4

a system for producing and distributing goods and services to fulfill people’s wants.

Question 5

when does an economy exist?

Answer 5

an economy exists in a place of region around where 1. production of goods and services take places, 2. expenditure on those goods and services takes place, 3. income is made from the selling of those goods and services

Question 6

what is opportunity cost

Answer 6

the loss of other alternatives when one alternative is chosen. it is the value of the best alternative given up. there can only be ONE oppourtunity cost

Question 7

what are trade offs

Answer 7

they are what you give up every time you make a choice (usually a list of options you gave up)

Question 8

what is scarcity

Answer 8

the idea that there is a limited amount of resources to meet unlimited wants (the economic problem)

Question 9

what is inflation

Answer 9

a general increased in prices and fall in the purchasing value of money

Question 10

what is recession

Answer 10

a period of temporary economic decline during which trade and industrial activity are reduced. generally identified by a fall in GDP in two successive quarters

Question 11

what is microeconomics

Answer 11

how individuals, businesses, and households make decisions - small scale

Question 12

what is macroeconomics

Answer 12

how an entire economy functions (the sum total of all the individual households, individuals and businesses use their resources) - large scale

Question 13

what are costs

Answer 13

what you spend when you make a choice (eg. time, money, resources)

Question 14

what are benefits

Answer 14

what you gain when you make a choice (eg. time, money, resources)

Question 15

what is cost-benefit analysis

Answer 15

listing out the costs and benefits of a decision and then making a choice

Question 16

what is margin

Answer 16

the outside edge or border

Question 17

what is marginal benefit

Answer 17

what you gain by adding one unit of something (eg. time)

Question 18

what is marginal cost

Answer 18

what you lose by adding one unit of something

Question 19

what is incentive

Answer 19

something that motivates a person to act a certain way

Question 20

what are needs

Answer 20

essential goods and services that humans need in order to achieve a basic standard of living.

Question 21

what are collective wants

Answer 21

to satisfy the needs of society as a whole (eg. libraries and roads)

Question 22

what are wants

Answer 22

they provide us with a level of satisfaction and help support the lifestyle of standard of living that we aspire to.

Question 23

what are individual wants

Answer 23

to satisfy personal desires of individuals

Question 24

what are complementary wants

Answer 24

a good or service that is related to the use of an associated good or service

Question 25

what are goods

Answer 25

physical items of value that are traded (eg. cars, milk, iphones)

Question 26

what are services

Answer 26

non-physical items of value that are traded (eg. education, haircuts, healthcare)

Question 27

what is the production possibility curve

Answer 27

a tool used by economists to demonstrate how opportunity costs arise when individuals or the community make choices. it is often used to illustrate the concept of opportunity cost.

Question 28

what are factors of production

Answer 28

used to produce goods or service that satisfy needs and wants. the 4 economic resources are: land, labour, capital, and enterprise

Question 29

what are land resources

Answer 29

resources that occur in nature that can be utilised in the production process to generate more elaborate products or consumed in their raw form

Question 30

what are labour resources

Answer 30

mental and physical effort exerted by humans in the production process

Question 31

what are captial resources

Answer 31

refers to those resources that have been made by combining labour and natural resources to create a more sophisticated input in the production process (eg. machinery)

Question 32

what are enterprise resources

Answer 32

the skills of those individuals who combine our resources to produce goods and services

Question 33

what are consumer goods

Answer 33

items produced for the immediate satisfaction of individual and community needs and wants

Question 34

what is a recurring want

Answer 34

wants that are never satisfied and keep recurring

Question 35

what is externality

Answer 35

a situation whereby society, not just the individual consumer of the good or service pays a cost or receives a benefit for the consumption and/or production of the good or service

Question 36

what is a trade-off

Answer 36

an alternative that we can sacrifice when we make a decision

Question 37

what is marginal utility

Answer 37

satisfaction or usefulness obtained from acquiring one more unity of a product (same as marginal benefit)

Question 38

what is trade

Answer 38

the voluntary exchange of goods and services between two or more parties

Question 39

what is a market

Answer 39

an arrangement that allows buyers and sellers to exchange goods or services

Question 40

what is specialisation

Answer 40

occurs when people and businesses concentrate on what they are best at

Question 41

what is division of labour

Answer 41

division of work into a number of separate tasks to be performed by different workers

Question 42

what is the production process

Answer 42

the activities, equipment, and resources needed to manufacture a product

Question 43

what is a command economy

Answer 43

an economic system in which the government makes all the economic decisions

Question 44

what is a market economy

Answer 44

an economic system in which decisions on production and consumption of goods and services are based on voluntary exchange in markets

Question 45

what is a mixed economy

Answer 45

an economy in which private enterprise exists in combination with a certain amount of government regulation and promotion

Question 46

what is sunk cost

Answer 46

a cost that has already been incurred and that cannot be changed by any decision made now or in the future

Question 47

what is input

Answer 47

scarce resources that go into making a product

Question 48

what is an output

Answer 48

the goods and services that are created using imputs

Question 49

productivity = ?

Answer 49

output/input