Econ 1 Chapter 1

Front 1

Renewable resources

Back 1

Resources whose stock level can maintain at a certain level

Front 2

Non-renewable resources

Back 2

Resources that will eventually be completely depleted

Front 3

Capital

Back 3

Man-made assets which can be used for production

Front 4

Scarcity

Back 4

resources are finite whereas wants are infinite

Front 5

What do consumer goods do?

Back 5

Give satisfaction to consumers eg phones

Front 6

What are capital goods required to do?

Back 6

Produce other capital and consumer goods eg factories

Front 7

What are the two ways goods and services are produced?

Back 7

Labour intensive or capital intensive

Front 8

The free market economy

Back 8

Determined by market forces

Front 9

The command/centrally planned economy

Back 9

Determined by the state

Front 10

Division of Labour

Back 10

Work split into smaller tasks

Front 11

3 advantages of the division of labour

Back 11

1) each worker specialises in a task which they're suited in - trained in one task

2) more efficient

3) increase in use of machinery, increases production and reduces cost of production

Front 12

3 disadvantages of the division of labour

Back 12

1) monotony and boredom - decrease productivity

2) loss of skills- worrying if made redundant

3) strike by one group brings production to a standstill

Front 13

The next best alternative which is forgone when a choice is made...

Back 13

Opportunity cost

Front 14

What is the difference between an economic good and a free good?

Back 14

Economic good commands a price and is scarce, whereas a free good is unlimited in supply and the opportunity cost is 0

Front 15

Objective statements based on facts which can be proved or disproved...

Back 15

Positive statements

Front 16

Normative statement

Back 16

Subjective statements based on value judgements and cannot be proved or disproved

Front 17

PPF

Back 17

Illustrates the maximum potential output of an economy when all resources are fully employed

Front 18

1) At which points are all resources fully employed

2) give 2 reasons why there may be unemployed resources at point X

3) why is D unattainable?

Back 18

1) A B and C

2) unemployment and unused machinery

3) require an increase in resources, increase in the productivity of resources or improvement in technology

Front 19

1) what does this PPF demonstrate?

2) what will a decrease in consumer goods X1 to X2 result in?

Back 19

1) opportunity cost

2) increase in capital goods from C1 to C2

Front 20

Why is the PPF a straight line?

Back 20

Opportunity cost is constant

Front 21

Economic Growth

Back 21

Refers to increase in productive capacity of an economy which indicates real incomes have increased

Front 22

1) What does the movement from A to C represent?

2) what is this likely to result in long term?

Back 22

1) increase in the productive capacity of an economy, indicating economic growth

2) increase in living standards

Front 23

3 factors causing an outward shift in the PPF

Back 23

1) discovery of new natural resources

2) new methods of production increasing productivity

3) improvements in training and education - boost productivity

Front 24

3 factors causing an Inward shift in the PPF

Back 24

1) depletion of natural resources

2) natural disasters

3) deep recession - loss of productivity