Definitions: The reasons for individuals, organisations 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 Problems
How to allocate scarce resources among alternative uses
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Household
Group of people whose spending decisions are connected
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Microeconomics
The study of how households and firms make decisions in market
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Macroeconomics
The study of issues that affect economics as a whole
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Model
A simplified view of reality that is used by economists as a means of explaining economic relationships
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Factor of production
The resources inputs that are available in an economy for the production of goods and services
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Goods
Tangible products, i.e. products that can be seen and touched, such as cars, food and washing machines.
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Services
Intangible products, i.e. products that cannot be seen or touched, such as banking, beauty, therapy and insurance
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Land
Natural resources in an economy
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Labour
The quantity and quality of human recourses
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Capital
Man-made aids to production
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Entrepreneurship
The willingness of and entrepreneur to take risks and organise production
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Entrepreneur
Someone who bears the risks of the business and who organises production
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Factor endowment
The stock of factors of production
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Production
The output of goods and services
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Want
Anything you would like, irrespective of whether you have the resources to purchase it
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Scarcity
A situation where there are insufficient resources to meet all wants
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Choice
The selection of appropriate alternatives
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Opportunity cost
The cost of the (next) best alternative, which is forgone when a choice is made
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Specialisation
The concentration by a worker or workers, firm, region or whole economy on a narrow range of goods and services
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Exchange
The process by which goods and services are traded
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Subsidy
A payment by a government 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
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 state of technology
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Developed economy
An economy with a high level of income per head
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Developing economy
An economy with a relatively low 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 resources are allocated through the market forces of demand and supply
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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 able and willing 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 collect centrally
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Mixed economy
An economic system in which resources are allocated through a mixture of the market and direct public sector involvement
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Card 2

Front

How to allocate scarce resources among alternative uses

Back

Economic Problems

Card 3

Front

Group of people whose spending decisions are connected

Back

Preview of the back of card 3

Card 4

Front

The study of how households and firms make decisions in market

Back

Preview of the back of card 4

Card 5

Front

The study of issues that affect economics as a whole

Back

Preview of the back of card 5
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