The reasons for individuals, firms and societies having to make choices.

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Economics
The study of how to allocate scarce resources in the most effective way.
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Economic Problem
Unlimited wants and scarce resources means that no society can sufficiently produce enough to satisfy everyone's wants. Therefore, choices must be made about how to allocate resources.
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Household
A group of people whose spending decisions are connected.
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Factor of Production
Types of resource inputs used to produce goods and services: land, labour, capital and enterprise.
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Goods
Tangible products, i.e. products that can be touched. E.g. cars
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Services
Intangible products, i.e. products that cannot be touched. E.g. banking
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Land
Nature resources in an economy, gifts of nature. E.g. mineral wealth
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Labour
The quality and quantity of human resources.
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Capital
Man-made aids to production. E.g. factories
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Enterprise
The willingness of an entrepreneur to take risks and organise production.
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Entrepreneur
Someone who bears the risks of the business and who organises production. E.g. Richard Branson
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Factor Endowment
The stock of factors of production a country possesses.
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Specialisation
The concentration by a worker, firm, region or whole economy on a narrow range of goods and services.
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Subsidy
A payment by a governing body to encourage the production or consumption of a product.
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Division of Labour
The specialisation of labour where the production process is broken down into separate tasks.
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Productivity
The output, or production of a good or service, per worker.
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Production Possibility Curve
This shows the maximum quantities of different combinations of output of two products, given current resources and the state of technology.
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Developed Economy
An economy with a high level of income, per head.
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Trade-Off
The calculation involved in deciding on whether to give up one good for another.
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Economic Growth
Change in the productive potential of an economy.
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Productive Potential
The maximum output that an economy is capable of producing.
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Economic System
The way in which production is organised in a country or group of countries.
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Market Economy
An economic system whereby scarce resources are allocated through the market forces of demand and supply, between alternate uses.
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Price System
A method of allocating resources by the free movement of prices.
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Supply
The quantity of a product that producers are willing and able to provide at different market prices, over a period of time.
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Demand
The quantity of a product that consumers are willing and able to purchase at various prices, over a period of time.
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Command Economy
An economic system in which most resources are state owned and also allocated centrally.
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Mixed Economy
An economic system that uses both market forces and state control to allocate scarce resources between alternative uses.
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Other cards in this set

Card 2

Front

Unlimited wants and scarce resources means that no society can sufficiently produce enough to satisfy everyone's wants. Therefore, choices must be made about how to allocate resources.

Back

Economic Problem

Card 3

Front

A group of people whose spending decisions are connected.

Back

Preview of the back of card 3

Card 4

Front

Types of resource inputs used to produce goods and services: land, labour, capital and enterprise.

Back

Preview of the back of card 4

Card 5

Front

Tangible products, i.e. products that can be touched. E.g. cars

Back

Preview of the back of card 5
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