Key Terms F581 - Chapter 1 Key Terms unit 1 1.0 / 5 based on 1 rating ? EconomicsReasons for Individuals, organisations and societies having to make choicesASOCR Created by: NatalieCreated on: 25-01-15 10:52 Economics the study of how to allocate scarce resources in the most effective way 1 of 38 Economic Problem how to allocate scarce resources among alternative uses 2 of 38 Household group of people whose spending decisions are connected 3 of 38 Microeconomics the study of how households and firms make decisions in markets 4 of 38 Macroeconomics the study of issues that affect economies as a whole 5 of 38 Model a simplified view of reality that is used by economists as a means of explaining economic relationships 6 of 38 Factor of production the resource inputs that are available in an economy for the production of goods and services 7 of 38 Goods tangible products, i.e. products that can be seen and touched, such as cars, food and washing machines 8 of 38 Services intangible products, i.e. products that cannot be seen or touched, such as banking, beauty therapy and insurance 9 of 38 Land natural resources in an economy 10 of 38 Labour the quantity and quality of human resources 11 of 38 Capital man-made aids to production 12 of 38 Entrepreneurship the willingness of an entrepreneur to take risks and organise production 13 of 38 Entrepreneur someone who bears the risk of the business and who organises production 14 of 38 Factor endowment the stock of factors of production 15 of 38 Production the output of goods and services 16 of 38 Want anything you would like, irrespective of whether you have the resources to purchase it 17 of 38 Scarcity a situation where there insufficient resources to meet all wants 18 of 38 Choice the selection of appropriate alternatives 19 of 38 Opportunity Cost the cost of the (next) best alternative, which is foregone when a choice is made 20 of 38 Specialisation the concentration by a worker or workers, firm, region or whole economy on a narrow range of goods and services 21 of 38 Exchange the process by which goods and services are traded 22 of 38 Subsidy a payment by a governing body to encourage the production or consumption of a product 23 of 38 Division of labour the specialisation of labour where the production process is broken down into separate tasks 24 of 38 Productivity output, or production of a good or service, per worker 25 of 38 Production possibility curve this shows the maximum quantities of different combinations of output of two products, given current resources and the state of technology 26 of 38 Developed economy an economy with a high level of income per head 27 of 38 Developing economy an economy with a relatively low level of income per head 28 of 38 Trade-off the calculation involved in deciding on whether to give up one good fro another 29 of 38 Economic growth change in the production potential of an economy 30 of 38 Productive potential the maximum output that an economy is capable of producing 31 of 38 Economic system the way in which production is organised in a country or group of countries 32 of 38 Market economy an economic system whereby resources are allocated through the market forces of demand and supply 33 of 38 Price system a method of allocating resources by the free movement of prices 34 of 38 Supply the quantity of a product that producers are willing and able to provide at different market prices over a period of time 35 of 38 Demand the quantity of a product that consumers are able and willing to purchase at various prices over a period of time 36 of 38 Command economy an economic system in which most resources are state owned and also allocated centrally 37 of 38 Mixed economy an economic system in which resources are allocated through a mixture of the market and direct public sector involvement 38 of 38
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