Questions and Answers
What is opportunity cost?
What is the economic problem?
The idea that resources are scarce and wants are unlimited
What is an economy?
Where people produce goods and services
What is a market?
Signup and view all the answers
What defines a perfect market?
Signup and view all the answers
What characterizes an imperfect market?
Signup and view all the answers
What are the four factors of production?
Signup and view all the answers
What are consumer goods?
Signup and view all the answers
What are the two types of consumer goods?
Signup and view all the answers
What are capital goods?
Signup and view all the answers
What are public goods?
Signup and view all the answers
What are merit goods?
Signup and view all the answers
What is private wealth?
Signup and view all the answers
What is social wealth?
Signup and view all the answers
What is national wealth?
Signup and view all the answers
What is earned income?
Signup and view all the answers
What is unearned income?
Signup and view all the answers
What does resource allocation refer to?
Signup and view all the answers
What is an economic system?
Signup and view all the answers
What is the free market system?
Signup and view all the answers
What is the main aim of entrepreneurs?
Signup and view all the answers
What is the price mechanism?
Signup and view all the answers
How is average product calculated?
Signup and view all the answers
What is a primary industry?
Signup and view all the answers
What is a secondary industry?
Signup and view all the answers
What is a tertiary industry?
Signup and view all the answers
What is specialization?
Signup and view all the answers
What is division of labor?
Signup and view all the answers
What is marginal product?
Signup and view all the answers
What does the law of diminishing returns state?
Signup and view all the answers
What are increasing returns?
Signup and view all the answers
What are fixed costs?
Signup and view all the answers
What are variable costs?
Signup and view all the answers
What are total costs?
Signup and view all the answers
How are average costs calculated?
Signup and view all the answers
What is total revenue?
Signup and view all the answers
How is average revenue calculated?
Signup and view all the answers
What is the break-even point of production?
Signup and view all the answers
What is depreciation?
Signup and view all the answers
What is the optimum point of production?
Signup and view all the answers
What are increasing returns to scale?
Signup and view all the answers
Study Notes
Economic Concepts
- Opportunity Cost: Represents the value of the next best alternative that is forfeited when making a choice.
- The Economic Problem: Highlights the fundamental issue of scarce resources versus unlimited wants.
- Economy: A system where goods and services are produced and exchanged by individuals and businesses.
Markets and Production
- Market: A venue where buyers and sellers engage in the exchange of goods and services.
- Perfect Market: A scenario where neither consumers nor producers can manipulate the market price of goods and services.
- Imperfect Market: Occurs when a single powerful consumer or producer can influence market prices.
- The Four Factors of Production: Includes Land, Capital, Labour, and Enterprise, each essential for producing goods and services.
Goods and Services
- Consumer Goods: Products that are purchased by individuals to satisfy personal wants and needs.
- Types of Consumer Goods: Distinct categories include durable goods (long-lasting) and non-durable goods (short-lived).
- Capital Goods: Man-made resources that facilitate the production of other goods and services.
- Public Goods: Goods provided by the government that are not typically produced by private firms due to lack of profitability.
- Merit Goods: Services provided by the government based on societal need, regardless of consumers' ability to pay.
Wealth Concepts
- Private Wealth: Refers to the assets owned by individuals or businesses in the private sector.
- Social Wealth: Encompasses goods and services owned by the government in the public sector.
- National Wealth: The total of both private and social wealth within a nation.
Income Types
- Earned Income: Money received from labor or work, such as wages and salaries.
- Unearned Income: Revenue generated from assets, requiring no active work, such as interest or dividends.
Resource Allocation
- Resource Allocation: The distribution of factors of production in the creation of specific goods and services.
- Economic System: Framework for addressing a country's fundamental economic questions: what to produce, how to produce, and for whom to produce.
Market Mechanisms
- Free Market System: An economic structure where producers and consumers dictate the production of goods.
- Price Mechanism: A tool utilized by entrepreneurs to determine production decisions based on consumer demand.
Production Metrics
- Average Product: Calculated as total product divided by the number of labor units used.
- Marginal Product: Represents the additional output obtained from increasing inputs, calculated as the change in total product divided by the change in labor.
- Fixed Costs: Expenses that remain constant regardless of output levels.
- Variable Costs: Costs that increase in proportion to the level of output produced.
- Total Costs: The sum of fixed and variable costs incurred in production.
Revenue and Profit
- Total Revenue: The overall income from sales, computed as price per unit multiplied by quantity sold.
- Average Revenue: Total revenue divided by the total output produced.
- Break-Even Point: The production level at which total costs equal total revenue, resulting in no net loss or gain.
- Optimum Point of Production: The production level where average costs are minimized.
Returns and Economic Principles
- Law of Diminishing Returns: Suggests that adding more factors of production will eventually yield lower additional output.
- Increasing Returns: Indicates a scenario where increasing production inputs results in a more than proportional increase in outputs.
- Increasing Returns to Scale: Describes a situation where doubling inputs leads to more than double the output.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Description
This set of flashcards covers essential economic concepts relevant to the IGCSE Economics curriculum. Each card defines key terms such as opportunity cost, the economic problem, and market dynamics. Perfect for students looking to reinforce their understanding of economic principles.