Scarcity,Choice and Opportunity cost
Factor of production
Different economic systems
PPC
Classification of G&S
100

What is fundamental economic problem

scarce resources but unlimited wants; sometimes called the basic economic problem.

100

What’s 4 of FOP

Land Labor Capita Enterprise 

100

What is command economy 

  • all resources are allocated by the government, with no market.
100

Def PPC

a simple representation of the maximum level of output that an economy can achieve, given its current resources and state of technology; may be referred to as a production possibility frontier.

100

Excludability and rivalry

excludability: where it is possible to stop someone from consuming a good or service.

rivalry: where consumption by one person of a good or service reduces the availability of the good or service for others.

200

What is opportunity cost

the cost expressed in terms of the next best alternative that is foregone when a choice is made.

200

What is division of labour

where a manufacturing process is split into a sequence of individual tasks.

200

What is free market economy 

  • all resources are allocated through the market forces of demand and supply, with no intervention by the government.
200

The consequence shift outward of PPC

LR economic growth 

all maximum output combinations increase 

200

 2 types of goods

public goods:non-rival & non-excludable 

private goods:rival &excludable 


300

What is scarcity

a situation in which wants and needs are greater than the resources available.

300

What is specialisation

the process by which individuals, firms and economies concentrate on producing those goods and services where they have an advantage over others.

300

What is mixed economy 

  • all resources are partly allocated by the market and partly by the government
300

Cause of PPC outward 

QQT increase 

300

What is merit goods 

goods is thought to be beneficial to consumers than they realize due to information failure ,under-production & under-consumption 

400

What is positive statement

a statement that is based on facts or actual evidence.

400

The difference between human capital and physical capital

physical capital: factors of production such as machinery, buildings and infrastructure.

human capital: the value of labour to the productive potential (future growth) of an economy.

400

The advantages and disadvantages of free market

Advantages

  • Resources are allocated by market forces and price mechanism
  • The profit motive provides an incentive to reduce costs and be innovative
  • The free market maximizes community surplus if there are no failures and imperfections

Disadvantages

  • Market failure 
  • Merit goods under-provided. Demerit goods over-provided
  • Public goods not provided 
  • Externalities 
400

The consequences of PPC moving along the curve

O.C.

trade off between output of 2 goods 

400

What is demerit goods 

be harmful than they realize,over-production & over-consumption 

500

What is normative statement


a statement that is based on the economist's opinion or value judgement and which cannot be proven.

500

What is economic growth

in the short run, an increase in a country's output and, in the long run, an increase in a country's productive potential.

500

The advantages and disadvantages of command economies

Advantages

  • The government can influence the distribution of income to make it more equal
  • The government can determine goods are supplied.

Disadvantages

  • shortage due to low prices 
  • No incentive or individuals or firms to be innovative, lack of a profit motive; goods are often poor quality and usually a limited choice.
500

Choice between consumer goods and capital goods 

More consumer goods :increase current living standards 

More capital goods:investment increase, increase LR production capacity and potential maximum output in the future 

500

What is information failure 

a situation where consumers do not have full or complete information when making decisions.

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