chapter 1) the economic problem

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  • Created by: safwan
  • Created on: 30-01-13 23:01
what is the fundamental economic problem?
there are infinite wants and yet limited resources
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what are the four factors of production and explain what they are?
1) capital and that is stock of goods used to make other good and services. 2) Land and that is resources we take from the world. 3) Labour and that is the potential work force, skills, intelligence, and abilities. 4) enterprise are risk takers
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Define economic welfare?
refers to the benefits or satisfication an individual or society gets from the allocation of resources.
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what are non-renewable resources and name one example
Non-renewable resources are reources which are once used and cannot be replaced, an example of that would be oil.
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what are the economic objectives for firms, government,individuals and workers?
Firms objectives are to maximise profits. The government is to maximise public interest and individuals is to maximise welfare and better standard of living. workers are to maximise their gains from working.
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what are the difference between free good and economic goods and name an example for each?
economic goods are goods which have an opportunity cost and are scarce, for example a computer. Free goods are goods that don't involve an opportunity cost for example air.
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what is scarcity?
scarcity means tend to value things more highly when they are both sought after and rare.
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Price has 3 functions, what are they?
signalling function, incentive function and rationalling function
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what is the production possibility frontier?
the production possibility frontier is a diagram showing two combinations of goods and services that can be produced given an existing level of resources and technology available.
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what are the possible factors that can shift the PPF curve outwards?
increasing the number of resources available for production such as increase of labour, new technology. the other factor is increasing the quality of resources available for production such as improving technology.
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Improving the quality of resources, how can that be achieved?
improving the quality of resources by improving the skills and abilities of workers and to increase the motivation of those workers. better organisation and management of existing human resources.
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what is division of labour?
division of labour is dividing up the production process into separate roles.
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define positive statements?
positive statements are statements that can be proven true or false.
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"The congestion charge for drivers of petrol-guzzling cars should increase to £25". Is it a Positive statement or a Normative statement.
Normative stateement
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"A reduction in income tax will improve the incentives of the unemployed to find work." Is it a postive statement or a Normative statement?
Positive statement
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Card 2

Front

what are the four factors of production and explain what they are?

Back

1) capital and that is stock of goods used to make other good and services. 2) Land and that is resources we take from the world. 3) Labour and that is the potential work force, skills, intelligence, and abilities. 4) enterprise are risk takers

Card 3

Front

Define economic welfare?

Back

Preview of the front of card 3

Card 4

Front

what are non-renewable resources and name one example

Back

Preview of the front of card 4

Card 5

Front

what are the economic objectives for firms, government,individuals and workers?

Back

Preview of the front of card 5
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