Term
| Define the subject of economics (1) |
|
Definition
| Economics is the study of how people use their scarce resources to make choices and satisfy their unlimited wants. |
|
|
Term
| Compare and contrast positive science, normative science and art. (3) |
|
Definition
- Positive science is based on facts, concerning what is. Such as scientific facts.
- Normative science is concerned with values. Things that are ought to be, thus investigating a positive analysis is desired.
- Art is the method of how we actually do it. |
|
|
Term
| What are Economics models? (1) |
|
Definition
| - Economic models are a simplified version of reality allowing us to investigate the real world effect, and answer the economic questions asked. |
|
|
Term
| How do they relate to scientific analysis (1)? |
|
Definition
| - They follow the same concept of solving questions, by using the same kind of scientific method. Such as Gathering data (information) developing a hypothesis, and using this information to test and evaluate the hypothesis. |
|
|
Term
| Demonstrate a simple model of cause and effect using a function formula, and two dimensional graph or diagram. (4) |
|
Definition
| Just sketch x/y axis, with a linear increase/decrease which shows how a function (x) is related to (y) |
|
|
Term
Question 2)
Explain the relationship between scarcity and opportunity costs (2) |
|
Definition
| Scarcity simply means that there is a limit to the supply of whatever we are referring to. Opportunity costs are the cost of the next best thing we choose not to do or use because we are using a more desired alternative. The amount of time in a day is limited to 24hrs - time is scarce. If we decide to go to the beach for two hours instead of studying for the same amount of time, the opportunity cost for two hours on the beach is two hours of studying. |
|
|
Term
| What are the advantages and disadvantages of specialization (3) |
|
Definition
| One main advantage of specialization is the improved efficiency by becoming better of producing that thing as we learn from our job. This typically leads to lower production costs and higher quality of the product. Specialized workers tend to earn higher wages but they also tend do be bored with the repetitive tasks involved in specialization (i.e assembling a steering wheel on a car instead of assembling the whole car). Also, by being specialized it means one person cannot do another persons job, meaning that we have to rely on others to perform as decided. If one specialized cannot produce a part needed for your final product, all production will be at a standstill. Managing the avoidance of this is costly as all specialized parties involved needs to be kept on track. |
|
|
Term
| Explain the six types of economic choices which must be made in any society. (3) |
|
Definition
| -What to produce (product mix offered), how to produce (technology), who will get the goods (willing & able in market economy), who will make these production choices (the market or Kim Jong Un), should the resources be spent now or invested (to be spent in future). How will these choices be made (i.e voluntary for profit) |
|
|
Term
| Describe five or more choices a consumer and workers enjoy from a free market exchange. (2) |
|
Definition
| - Lower price because of competition. Increased variation of products offered. Higher quality (in the eyes of consumer, which a producer may capitalize on). Freedom to choose (employer & product) as more jobs are offered. Increased opportunities of specialization which may lead to higher wages. |
|
|
Term
Question 3)
Explain the role of prices in solving the economic problems of production (2), technology (2), and income distribution (2). |
|
Definition
| - Prices will make sure producers make choices where profits can be made. Prices will make sure producers try to minimize costs to maximize profit. Price will also make sure we choose the most efficient method of production (technology) to minimize our production costs while maximizing output. Income distribution depends on the value of the resources that you make available to the market. And if these contributions to the market are in high demand and scare the price will be high.(Specialization) |
|
|
Term
| Identify five or more determinants of demand in a market.(2) |
|
Definition
| - Taste(What people want), Income(high/low income high/low cons.demand), Prices(Most important variable), Price of Substitutes, Future expectations(As oil prices will go up tomorrow, demand will raise today), Demographics |
|
|
Term
| Identify the determinants of supply(2). |
|
Definition
| Price of the good, Number of suppliers in the market and the price of these substitutes, productions costs, technological change (might increase the supply by being more efficient), future expectations of sellers prices(Might be a good decision to save resources for future maximizing profit) |
|
|
Term
Question 4)
Explain Wilfred Paretos definition of economic efficiency (2) |
|
Definition
| - According to Wilfred Pareto, economic efficiency states no one can be better off without making someone else worse off. |
|
|
Term
| Explain the three types of Economic efficiency (3) |
|
Definition
- Production Efficiency ( Production efficiency occurs whenever maximum number of goods is produced with the given inputs.)
- Allocative Efficiency ( Can also be called distributive efficiency, where the goods are distributed to wherever its needed the most)
- Production Mix Efficiency(The product will go to the person who is willing to pay the most) |
|
|
