Piece of cake
What is the economics problem?
unlimited wants exceeding finite resources.
Define scaricity
A situation where there is not enough to satisfy everyone’s wants.
Why will scarcity continue to be a problem in the future?
Wants will continue to increase
What is consumer goods?
goods and services purchased by households for their own satisfaction.
Define microeconomics
The study of the behaviour and decisions of households and firms, and the performance of individual markets.
Who makes the decisions in planned economic system
The state (government) makes the decisions
What are the three questions faced by all economies?
• What to produce?
• How to produce it?
• Who is to receive the products produced?
What do we call a point anywhere on the PPC?
Efficient
What do we call the point inside the PPC?
Inefficient
What is opportunity cost?
The cost of a decision in terms of the best alternative given up to achieve it
Who makes the decisions in market economic system?
The buyers, also known as consumers, makes the decisions
What are the four factors of production?
Land, Labour, Capital, Enterprise
Define economic goods
A product which requires resources to produce it and therefore has an opportunity cost.
How are resources allocated in a market economy?
By the price mechanism
Capital Intensive
The use of a high proportion of capital relative to labour
What causes the PPC shifts to the left?
What causes the PPC shifts to the right?
Define macroeconomics
The study of the whole economy.
Define free goods
A product which does not require any resources to make it and so does not have an opportunity cost.
Labour Intensive
The use of a high proportion of labour relative to capital.