Econ Cram

Cramming for my econ finals

Definition of economics

Economics is a social science that studies how individuals and society allocate scarce resources to satisfy unlimited wants and needs.

Definition of Economy

The mechanism through which scarce resources are allocated for the production of goods and services.

Want

A want is something that is desired by individuals or society to improve the quality of life, but it is not essential for survival

Need

A need is something that is essential for survival or for an individual/firm to function properly.

Good

Goods are tangible (physical) items that can be seen, touched, and stored. They satisfy wants or needs.

Service

Services are intangible (non-physical) activities or performances that satisfy wants or needs. They cannot be stored and are usually consumed at the point of production.

Gross Domestic Product (GDP)

The total monetary value of all final goods and services produced within a country’s borders over a specific period, usually one year.

Gross National Product (GNP)

The total monetary value of all final goods and services produced by a country’s nationals/residents (citizens), whether inside or outside the country, over one year.

National Income (NI)

The total monetary value of all final goods and services produced by the residents of a country over one year, after deducting depreciation (wear and tear of capital).

National Income at Factor Cost

The sum of all incomes earned by the owners of the factors of production (land, labour, capital, entrepreneurship) after adjusting for indirect taxes and subsidies. (Also known as NI)

Choice

When an individual, household, firm or gov’tt is faced with options and has to make a decision

Opportunity Cost

The next best alternative forgone

Money Cost

The actual money spent for the production of goods and services

A PPC/F/B

A graph that shows the that shows the combination of two goods a economy can produce given the available resources and technology

Economic Decisions

Where an individual, household, firm or government is faced with options and has to choose the best course of action.

ED of Households

Personal Choice

Bandwagon effect/Tonesse Effect

Level of Education

Type of Work

ED of Firrns

Industrial Relations

Profit

Cost of Production

ED of Gov’tt

Laws and grants

General laws

Taxes

Laws concerning the employment of disabled persons

Production

Production is the process of creating goods and services using the factors of production (land, labour, capital and enterprise) to satisfy human wants and needs.

Productivity

Productivity is the output produced per unit of input

How can productivity be increased

better training, technology, motivation, specialization

Specialization

Specialisation occurs when a person, firm or country focuses on a particular task or product instead of trying to produce everything. This leads to greater efficiency and higher output.

Division of Labor

Division of labour is the breaking down of the production process into a series of small, specialised tasks, with each worker performing only one or a few of these tasks.