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Questions and Answers

What are the factors of production?

  • Land (correct)
  • Labour (correct)
  • Resources
  • Capital (correct)

What is Opportunity Cost?

  • London
  • The next best choice between two things
  • The next best alternative foregone when a decision is made (correct)
  • The alternative to something

What are the 3 choices?

  • Who gets it (correct)
  • What to produce (correct)
  • Who deserves it
  • How to produce it (correct)

What is scarcity?

<p>unlimited wants (A), limited resources (C)</p>
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What is the formula for PED ( Price Elasticity)?

<p>% change in Q demanded / % change in price (A)</p>
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What does Inelastic and Elastic mean?

<p>Elastic = big change (B), Inelastic = small change (D)</p>
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What goods are Elastic?

<p>Gucci Belt (A), Sports Car (C)</p>
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What goods are inelastic?

<p>Heinz Beans (A), Milk (C)</p>
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What yields are elastic / inelastic?

<p>Inelastic = between 0 &amp; 1 (B), Elastic = &gt;1 (C)</p>
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What is the formula for YED (Income Elasticity)?

<p>% change in Q demanded / % change in income level (A)</p>
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Which statements are true

<p>Normal goods YED = &gt;0 (A), Luxury goods YED = &gt;1 (C)</p>
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Which statement is true?

<p>Inferior goods YED = &lt;0 (A)</p>
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What are injections?

<p>Exports (A), Investments (C), Government Spending (D)</p>
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What are withdrawls?

<p>Taxes (C), Imports (D), Savings (B)</p>
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What is the flow of production?

<p>Firm providing goods &amp; services to Household (B), Household providing Land Labour Capital Enterprise to Firm (D)</p>
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What is the flow of expenditure?

<p>Firm providing rent, wages, interest, and profit to Household (C), Household providing payment to Firm (D)</p>
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What happens to national income if Withdrawls are greater than injections?

<p>National Income falls (B)</p>
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What will happen if injections are greater than withdrawls?

<p>National Income rises (B)</p>
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What causes market failure?

<p>under/over production of resources (B), Insufficient allocation of goods &amp; resources (A)</p>
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Public goods are...

<p>Lamp posts (A)</p>
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Public goods are...

<p>non-rivalrous &amp; non-excludable (A), provided for free to prevent free riding (C)</p>
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Merit goods are...

<p>benefit society (A), provided at gov reduced rate to prevent being underfunded/only available from private businesses (C), Hospitals (D)</p>
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Restricted competition...

<p>Monopoly or few competitors (B), Royal Mail (D), Restricted options force customers to pay any price (C)</p>
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Externalities...

<p>Smoking (bad for health, strain on health services, combatted by gov ban) (C), +/- effects of consumption of goods/services (D)</p>
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Info failure...

<p>Buyers dont have all info required to make informed decision (A), Menu with no prices (B)</p>
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What is gross domestic product

<p>Total value of goods/services provided in a country for 1 year. (B)</p>
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What is Gross National Product

<p>total value of goods/services provided in a country during 1 year, after depreciation has been accounted for. (A)</p>
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What is net national product?

<p>total value of goods/services provided in a country during 1 year, after depreciation has been accounted for. (A)</p>
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What does GDP measure

<p>total output income spending</p>
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Explain output method

<p>adds up value of final goods/services produced by public/private sector (C)</p>
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Explain expenditure method

<p>adds up all spending in country by individuals, firms, government, foreign buyers. (C)</p>
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Explain income method

<p>adds up all incomes earned (rent wages interest profit). (B)</p>
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Errors and omissions

<p>NI statistics may under/over estimate true value of goods/services produced in a country</p>
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Under recording of output

<p>Goods/services produced without money exchanging hands e.g &quot;DIY&quot;</p>
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Black/shadow economy

<p>People hiding earnings / what they produce to avoid income tax or to claim benefits</p>
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Double Counting

<p>Same output counted twice</p>
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Transfer incomes

<p>People who receive social security and pensions shouldn't be included in NI statistics as they aren't directly involved in producing output.</p>
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Flashcards

Capital of France (example flashcard)

Paris

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