Economics Unit 1 - The Economic Problem

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What is the central purpose of economic activity?
The production of goods and services to satisfy needs and wants
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What are the three main questions?
Who should we produce for? What should we produce? How can we produce it?
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What are the factors of production? (CELL)
Capital, Enterprise, Land, Labour
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What are the rewards for the factors of production?
Interest, Profit, Rent, Wages
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What is a free good?
A good that has no opportunity cost
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What is an economic good?
A good that has a benefit to society, but it has an opportunity cost
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What are the 3 main onjectives f
Profit, Revenue (sales), Growth
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What is the main objective for an individual?
Maximise welfare
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What is a scarce resource?
Factors of production for which demand exceeds supply
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What are the X and Y axis on a PPF?
X = consumer goods. Y = capital goods
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If an economy was productively efficient, where would the economy be on the PPF?
Anywhere on the PPF
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If an economy sits with the PPF, what does that mean?
The economy is not using all of the available resources
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What is an opportunity cost?
The next best alternative forgone
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What is the difference between a positive statement and a normative statement?
A positive statement can be verified true or false. A normative statement is the expression of an opinion
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Other cards in this set

Card 2

Front

What are the three main questions?

Back

Who should we produce for? What should we produce? How can we produce it?

Card 3

Front

What are the factors of production? (CELL)

Back

Preview of the front of card 3

Card 4

Front

What are the rewards for the factors of production?

Back

Preview of the front of card 4

Card 5

Front

What is a free good?

Back

Preview of the front of card 5
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