Economic Basics
What is the term for limited availability compared with unlimited wants and needs?
Scarcity
Which factor of production refers to anything provided by nature that helps in production?
Land
What is a market?
A market is where buyers and sellers come together to exchange goods and services and determine prices and quantities.
What is government revenue?
Government revenue is the income a government receives from various sources to fund public services and expenditure.
Name the three main types of economic systems.
Centrally Planned Economy, Free Enterprise Economy and Mixed Economy.
What is the benefit / value of the next best alternative that must be given up when making a choice?
Opportunity Cost
What is the reward for labour?
Wages
Give two different types of markets.
Physical, virtual, farmers' or shadow markets. Any two.
What is the difference between current revenue and capital revenue?
Current revenue comes from day-to-day sources such as taxes, fees and fines. Capital revenue is one-off income, such as revenue from privatisation or certain grants.
In which type of economic system does the government control most factors of production and economic decisions?
Centrally Planned Economy.
What are the 4 factors of production?
Land Labour Capital Enterprise
A bakery buys a new oven. Which factor of production does the oven represent, and what is its reward?
Capital; its reward is interest.
What does the Law of Demand state about the relationship between price and quantity demanded?
As price increases, quantity demanded decreases; as price decreases, quantity demanded increases.
What is government expenditure, and give two examples of government expenditure.
Government expenditure is the money the government spends on public services and programmes. Examples include healthcare, education, social protection and infrastructure.
What is a mixed economy?
A mixed economy combines elements of centrally planned and free enterprise economies, with both private and state-owned enterprises.
Explain the difference between financial cost vs opportunity cost.
Financial cost is the price paid for an item where as opportunity cost is the next best alternative that was given up.
What is the role of enterprise in the production process?
Enterprise brings the other factors of production together, organises the business and involves taking the risk in the hope of making a profit.
Name four factors that can affect demand.
Price, consumer preferences, income levels and market trends.
What is a national budget, and who is responsible for preparing the Irish National Budget?
The national budget is a financial plan outlining planned government revenue and expenditure, usually for one year. The Minister for Finance and the Minister for Public Expenditure and Reform are responsible for preparing the Irish National Budget.
Give one benefit and one drawback of a free enterprise economy.
Benefit → Competition can encourage businesses to innovate and provide better goods/services.
Drawback → Lack of regulation can lead to environmental or safety problems.
A student has €20 and chooses to buy a video game instead of going to the cinema. Identify the choice, financial cost, and opportunity cost.
Choice -> Buy the video game
Financial-> €20
Opportunity-> The cinema trip that was given up
A bakery uses a building, employs bakers, buys ovens and is run by an entrepreneur. Identify all four factors of production represented in this example.
Land → Bakery building/site
Labour → Bakers/employees
Capital → Ovens/equipment
Enterprise → Entrepreneur/business owner
A popular product becomes more expensive. According to the Law of Demand, what should happen to the quantity demanded, assuming other factors remain unchanged? Explain why.
Quantity demanded should decrease. According to the Law of Demand, there is an inverse relationship between price and quantity demanded: as price rises, consumers generally demand less.
Explain the difference between a budget surplus and a budget deficit. What relationship between government revenue and expenditure creates each one?
Budget surplus: Government revenue is greater than government expenditure.
Budget deficit: Government expenditure is greater than government revenue.
Ireland is a mixed economy. Explain why, using examples of both private enterprise and government involvement.
Ireland is a mixed economy because private businesses and entrepreneurs are free to operate and make profits, while the government also provides essential public services such as healthcare and education and regulates economic activity.