Economics Grade 10-11 Performance Enhancing Notes Review

Comprehensive practice flashcards covering themes of basic economics, business organizations, market forces, production, government policy, and global trade based on Grade 10-11 lecture notes.

How is Economics defined as a social science in the provided notes?

Economics studies how people and institutions within a society make choices and how these choices determine the use of the society’s resources to satisfy unlimited wants with scarce resources.

What is the 'basic economic problem'?

The nature of the economic problem is that the amount of economic resources available to satisfy human needs is insufficient to meet unlimited wants, also known as scarcity.

List the four factors of production and their basic definitions.

1. Land (natural resources), 2. Labour (human mental and physical input), 3. Capital (man-made resources like machinery/money), 4. Entrepreneurship (human initiative to combine resources).

Define opportunity cost as it relates to economic decision-making.

The best alternative given up in order to obtain the thing that has been chosen.

What is the difference between an 'economic good' and a 'free good'?

An economic good is obtained by paying a price and involves an opportunity cost; a free good is obtained without paying a price and involves no opportunity cost (e.g., air).

What are the primary characteristics of a Market Economy?

Resources are allocated by the market mechanism (demand and supply), property is privately owned, there is a profit motive, and limited government intervention.

Define Public Goods and Merit Goods.

Public Goods are services people do not pay for directly and are difficult to charge for (e.g., streetlights). Merit Goods are services the government believes everyone should have regardless of their ability to pay (e.g., education, health care).

What is 'Collective Bargaining' in the context of trade unions?

The process where managers and union representatives negotiate issues such as wages, working hours, and sick leave.

What formula is used to calculate the Price Elasticity of Demand ($PED$)?

$$PED = \frac{\text{Percentage change in quantity demanded}}{\text{Percentage change in price}}$$

Describe the four main functions of money.

1. A medium of exchange, 2. A unit of account (measure of value), 3. A store of value (saving for the future), 4. A standard of deferred payment (settling future debts).

What is the Law of Supply?

It states that when the price of a commodity rises, the supply for it also increases, as more suppliers are interested in offering the good at higher prices.

In production, when are profits considered maximized according to the marginalist rule?

Profits are maximized when Marginal Revenue ($MR$) equals Marginal Cost ($MC$), written as $\text{MR = MC}$.

Define 'Vertical Integration' in business growth.

Merging with a firm that operates in a different stage of production, categorized as 'Backward' (previous stage) or 'Forward' (next stage).

What are 'Internal Economies of Scale'?

Factors that lead to a reduction in average costs as a single business increases in size, such as technical, financial, marketing, and buying economies.

Contrast Fiscal Policy and Monetary Policy.

Fiscal Policy uses taxation and government expenditure to influence demand; Monetary Policy uses interest rates and control over the money supply via the Central Bank.

What is the 'Consumer Price Index' ($CPI$)?

A measure of the level of consumer prices that tracks changes in the cost of a representative basket of goods and services consumed by an average household.

Name and define the three main methods of measuring National Income.

1. Output method (total value of goods/services), 2. Spending/Expenditure method (sum of all spending), 3. Incomes method (total income generated through production).

Define Gross Domestic Product ($GDP$) versus Gross National Product ($GNP$).

$GDP$ measures the value of output produced within the domestic boundaries of a country; $GNP$ measures the total value of output produced by a country's owned factors of production regardless of location.

Explain the concept of 'Comparative Advantage' in international trade.

A country has a comparative advantage when it can produce a good or service at a lower opportunity cost than another country.

What is the 'Balance of Payments'?

A record of all money entering a country from exports and foreign investment, and all money leaving through imports and local investment abroad.

Distinguish between Private Costs and External Costs (Externalities).

Private Costs are paid by the firm producing the good; External Costs are paid by people who are not the producer or consumer (e.g., pollution suffered by the society).

What are the three categories of taxes based on the rate of payment relative to income?

Proportional taxes (same percentage for all), Progressive taxes (higher percentage for higher earners), and Regressive taxes (ratio of tax falls as income rises).