Unit 1: part 1

Question 1

” as price increases sales decrease “ … name two exceptions

Answer 1

snob goods

addictive products ie cigarettes

Question 2

” as price decreases sales increase “ … name two exceptions

Answer 2

snob goods

low quality products ie sell by dates

Question 3

What forms can scarcity take

Answer 3

time
resources (not having enough money)
goods (limited supply e.g. seasonal goods)

Question 4

why does the basic economic problem exist

Answer 4

goods and resources are scarce

Question 5

why would inefficiency occur on PPF graph

Answer 5

if there is a point below the PPF line on the graph showing that the maximum amount of something is not being produced in turns of another

Question 6

what is meant if there is a point outside of the PPF line?

Answer 6

you are being more efficient then the maximum efficiency so one of the factors of the graph must have increased to higher the PPF line

Question 7

what is a limitation with PPF

Answer 7

are you supplying for the demand?

for example are you balancing wants with how much of something you produce against the other?

Question 8

4 reasons an axis (element) on the PPF would increase

Answer 8

• was under efficient and now efficient
• a decrease in one other so increase in axis
• PPF line moves out (increases)
• improving effiency of that element or axis

Question 9

things to include when comparing

Answer 9

data
include both names
important / valid points

Question 10

goods provided by the market

Answer 10

food
cars
clothes

Question 11

goods provided by government

Answer 11

railway tracks
services
tapwater

Question 12

both market and government provided goods

Answer 12

some charities
education
houses
public transport

Question 13

what are the features of a market economy

Answer 13

resources allocated through supply and demand
government role is limited
government control property rights

Question 14

what are the features of a command economy

Answer 14

production targets are set from the main features of the economy
ownership of key resources lies with state

Question 15

what are the features of a mixed economy

Answer 15

some resources are allocated by the market e.g. the private sector such as cars and clothes.
some is allocated by the government ie railway tracks

Question 16

why must the government have property rights in a market economy

Answer 16

(Russia 1917)
to stop copy right or streaking which leads to a lack of internal production as people are not credited and paid for their work.

Question 17

what are the factors of production

Answer 17

enterprise
land
labour
capital

Question 18

how do you improve economic welfare

Answer 18

anything to make a person happier

expt) stealing or anything that compromises the happiness of another

Question 19

describe the production process

Answer 19

inputs > factor of production > output

Question 20

the environment as a scarce resource

Answer 20

physical resources) soil, water, flowers, minerals
gases) H O
abstract resources) solar energy, wind energy, beauty

Question 21

why might scarce resources be an issue even for the very rich

Answer 21

dead money) Ie money to spend but cannot because no resources to spend it on
limited incomes) few resources means for manufacturers that their output is limited