intro to + history of economics
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33 Terms
what is economics
the study of how individuals, businesses and institutions make choices, to optimise their level of satisfaction under conditions of scarcity
how are goods and services produced
through the factors of production
name the 4 factors of production
land, labour, capital and entrepreneurial activity
whats are two types of outputs
goods or services
give 3 different types of goods
durable, semi-durable and non-durable goods
give 4 different types of services
financial services
personal services
transport and logistics
wholesale and retail
what is a circular flow diagram composed of
firms, households, factor market and goods market
what flows in a circular flow diagram
real flows and monetary flows
real flows
flow of goods and services
monetary flow
flow of money
factor market
resource market
goods market
product market
what makes a problem an economic one
problem of scarcity and choice
needs vs wants
opportunity cost
the value of the next best alternative that is forfeited to undertake the activity
utility
pleasure, happiness or satisfaction obtained from consuming a good or service
how are consumers rational
they maximises utility subject to a budget constraint
how are producers rational
they choose production techniques and productive inputs that will yield the highest possible profits
marginal
additional, extra or change in
how do decision makers make choices rationally
they compare marginal benefit to marginal cost
economic principles
analyse economic behave and understand how the economy operates
ceteris paribus
all variables, except those under consideration, are held constant
positive economics
focus on facts and cause and effect relationships
normative economics
incorporates value judgements and recommendations
PPC
indicates the combination of two goods/services that are attainable whn all resources are fully and efficiently employed
what does it mean if a point is on the PPC
efficient
what does it mean if a point is inside the PPC
inefficient, but attainable
what does it mean if a point is outside the PPC
unattainable with current resources
when did the industrial revolution begin
second half of the 18th century in Britain
what are the 4 stages of Hockey Stick Growth
tinkering
blade years
the growth intellectual point
surgin growth
what did the industrial revolution result in
an increase in average living standards in England (but with great inequality)
how are living standards in high income countries compared to pre-industrial times
ten times higher than before
what is the difference between rich countries and poor countries
rich countries are industrialised while poor countries are not
why is income inequality regarded as bad
reduce social cohesion
erode trust
crime and other illegal activities
Note 
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