Introduction ( 2pages )

What is economics?

A science which studies human behaviour and how the scarce resources of the world which have alternative uses are distributed in attempting to satisfy the infinite needs and wants of mankind

What do economic goods command?

A price

What are the three characteristics of economic goods?

Price, utility, transferable

Price

Supply and demand should be closely matched

Utility

It must give satisfaction

Transferable

Possible to go from producer to consumer

What are the four factors of production?

Land, labour, capital, enterprise

Land

Supplied by nature

Labour

Workers supplying skills

Capital

Man made

Enterprise

Human initiative

Efficiency

Minimum cost

Equity

Fairness

Stability

Economic variables not fluctuating

What is the fundamental economic problem?

Scarcity

What is scarcity?

Scarcity means that while the supply of resources/factors of production are limited the demand for these is unlimited, society must choose on the use to which the resources are put. Making choices involves opportunity cost

Types of economy

Centrally planned economy, mixed economy

What is an example of a centrally planned economy?

China, opposite to market forces as a select few decide what is produced and by whom

What is an example of a mixed economy?

A mixed economy incorporates attributes of both, Ireland 40% government and 60% private

What is a positive statement?

An objective statement that can be tested and validated using evidence

What is a normative statement?

Expresses a value judgement about what ought to be, it is subjective and based on opinion, beliefs, presences rather than facts

What is a production possibility curve ( PPC )?

A graphical representation that shows the maximum possible output combination of two goods or services and economy can achieve when all resources are fully and efficiently utilised

Efficiency (PPC)

Points on the curve represent efficient use of resources

Opportunity cost (PPC)

The slope of the curve shows the opportunity cost of producing once good over another

Economic growth (PPC)

An outward shift of the curve indicates economic growth meaning more of both goods can be produced

Scarcity and trade offs (PPC)

The curve illustrates the trade offs and scarcity of resources