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21 Cards in this Set
- Front
- Back
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Free Goods |
Resources that are not scarce and are unlimited in supply, for example air
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Economic goods |
Resources that are scarce and have an opportuniy cost
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Opportunity cost
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the next best alternative.
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Factors of Production |
Land , Capital , Labour , Enterprise
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Productive efficiency |
When a firm operates at minimum average total cost, producing the maximum possible output from inputs into the production process.
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Allocative efficiency
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Is achieved in an economy when it is not possible to make anyone better off without making someone worse off.
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Specialisation |
Is the production of a limited range of goods by an individual factor of production on a firm or country
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Division of Labour
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Is breaking the production process down into a sequence of tasks , with workers assigned to a particular task.
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Benefits of Division of labour |
Products are made quicker , Greater quality as each person is trained for each process and less products are wasted.
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Specialisation
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Advantages - No need to spend money on other resources you can use the resources you have and trade for others ; Incorages trading. Disadvantages - If there is no more resources to produce the product the country wont make any income ; Borring due to repetitiveness ; Demand falls = Trouble . |
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Normative statements
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Statements which cannot be supported or refused e.g. we should ban cars because of the polution they make.
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Positive Statements
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Statements which can be proven to be true or false . E.g. UK property prices have increased over 5 years.
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Market
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A market brings together potential buyers and sellers. It is a set of arrengements that allows transactions to take place.
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Functions of money
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Medium of exchange , A store of value ( must be possible to use for future transactions) , Unit of account ( reflects the value society puts on them).
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Economic Agents
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Consumers , Governament , Workers , Firms . |
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Individual Demand |
Is the amount consumers are willing and able to buy at each given price level. |
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Effective Demand
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Is demand supported by ability to pay for a good or service. |
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Market Demand
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Total Demand in a market for a good , the sum of all individuals demand at each given price .
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Factors affecting demand |
Change in quality, Fashion , advertising , change in income , the law , Weather conditions and uncertainty over future prices .
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Equilibrium
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The price at which demand is equal to supply and there is no tendency for change
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Disequilibrium
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A situation where supply does not equal demand.
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