Term
| what is the basic economic problem? |
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Definition
| We have unlimited wants and needs, and limited resources. |
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Term
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Definition
| the next best option which is given up |
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Term
| what are the 4 types of markets? |
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Definition
1. Consumer durable
2. Consumer non-durable
3. Industrial
4. Services |
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Term
| what are 4 types of economies? |
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Definition
1. mixed
2. command
3. traditional
4. capitalist |
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Term
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Definition
it is how a nation makes economic choices
how will the nation use its resources?
how to produce and distribute recources |
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Term
| what are the factors of production (aka resources) |
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Definition
1. land
2. labor
3. capital
4. entrepreneurship
5. (technology) |
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Term
| what are the 3 questions that a nation has to ask when deciding what to use its resources for? |
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Definition
1. what goods or services should be probuced
2. how should they be produced
3. for whom should they produce |
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Term
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Definition
1. Freedom of ownership
2. Democracy
3. Political power within the people
Examples – USA and Japan |
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Term
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Definition
1. Freedom of ownership
2. Democracy
3. Political power within the people
Examples – USA and Japan |
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Term
|
Definition
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Term
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Definition
1. Freedom of ownership
2. Democracy
3. Political power within the people
Examples – USA and Japan |
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Term
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Definition
1. Increased Government involvement
2. Goal – keep prices low/employment high
3. Many government run industries
4. More social services
5. People & Businesses pay much higher taxes
Examples – Canada, Germany, Great Britain, Sweden and Australia |
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Term
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Definition
1. Totalitarian form of government – which means the government runs everything
2. All people share common economic & political goals
3. Government decided schooling, housing, etc
4. Little or no basic freedom
Examples – Cuba, North Korea |
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Term
| define Comparative Advantage |
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Definition
| This is when a nation has an ability to produce a good more efficiently than another country. |
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Term
| define absolute advantage |
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Definition
| This is when a country can produce goods at a lower cost with fewer inputs per output than another country. |
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Term
why do countries trade?
(3 reasons) |
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Definition
- All countries have limited resources
- To gain access to materials not available in their local economy
- To establish good relations with other countries |
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Term
| factors which cause a shift in the supply curve (PENPAL) |
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Definition
P = Price (factors of production)
E = Efficient
N = Natural Factors (Disasters)
P = Productivity
A = Automation (Machinery)
L = Levies (Taxes and duties) |
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Term
| factors which cause a shift in the demand curve (PIGFACE) |
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Definition
P = Price
I = Income
G = Government
F = Fashion
A = Advertising
C = Composition
E = Expectations |
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Term
| what determines the supply of a market? |
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Definition
| The quantity of a good or service a seller is willing and able to sell at a given price |
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Term
| how is demand determined? |
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Definition
| The quantity of a good or service a buyer is willing and able to buy at a given price |
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Term
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Definition
| This factor of production includes machinery and money |
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Term
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Definition
| This is a lack of resources to satisfy human wants and needs |
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Term
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Definition
| This factor of production combines all other factors |
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Term
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Definition
| The factor of production which includes raw materials, they come from land, air and sea |
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Term
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Definition
| Gross Domestic Product. this is the total value of goods and services produced by a nation. |
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Term
| what does GDP per capita mean? |
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Definition
| this is the total value of the goods and servies produced by a nation, divided by the population; it gives you an idea of how wealthy the people are on average |
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Term
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Definition
| the value of all the goods and services produced in an economy, plus the value of the goods and services imported, less the goods and services exported. |
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Term
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Definition
| This is a product for which our demand increases as our incomes increase. |
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Term
| what is an inferior good? |
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Definition
| This is a product for which demand falls as incomes increase. For example bread is considered to be an inferior good because people buy more luxury food items as their incomes increase. |
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Term
we know that
when price increases, demand -------
when demand increases, price --------
however, when there is a shift:
when demand increases, price ------
when demand decreases, price ------ |
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Definition
We know that:
When price increases------- demand decreases
When price decreases------ demand increases
However, when demand shifts:
Demand increases------Price increases
Demand decreases-----Price decreases |
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Term
| what is an exchange rate? |
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Definition
| The rate at which a unit of the currency of one country can be exchanged for a unit of the currency of another |
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Term
| What determines the price of a commodity like tomatoes or bread? |
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Definition
| The cost of production and transport, and the supply and demand. |
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Term
| What determines the price of a currency? |
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Definition
| If there is an increase in demand for a product then the price would go up and if the supply for a currency is low, the value is low. |
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Term
flow of goods ---
coming in to a country =
leaving a country = |
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Definition
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Term
flow of money ---
leaving a country =
entering a country = |
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Definition
leaving a country = imports
entering a country = exports |
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Term
how do we pay for the things we import?
(easy and economical answers) |
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Definition
Easy answer – from individual disposal income and from business investment
Economic answer – from the sale of exports. This leads us to the concept of balance of payments. |
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Term
| what is the balance of payments? |
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Definition
| The Balance of Payments is an account of a country’s payments to and receipts from the rest of the world. |
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Term
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Definition
This is the trade in physical goods i.e. things we can see and touch
The different between the values of physical imports and exports is known as the balance of trade. |
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Term
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Definition
| This is the buying and selling of services; interest, profits and dividends; and Transfer payments (grants or gifts) |
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Term
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Definition
| When the value of exports is greater than the value of imports. |
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Term
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Definition
| When the value of exports is less than the value of imports |
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Term
| what is the formula for TOTAL VARIABLE COST? |
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Definition
| variable cost per unit x number of output |
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Term
| what is the formula to work out TOTAL COST? |
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Definition
| total fixed cost + total variable cost |
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Term
| what is the formula to work out TOTAL REVENUE? |
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Definition
| selling price per unit x number of output |
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Term
| what is the formula to work out PROFIT (or LOSS)? |
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Definition
| total revenue – total cost |
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Term
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Definition
| it is the income gained from the sales of goods and services |
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Term
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Definition
| a price that never changes, no matter what the output is. |
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Term
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Definition
| this price changes, depending on the output produced. |
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