Economics- Economic foundations

• What is meant by economies of scale?

  A proportionate saving in costs due to an increase in the scale of production
• How do economies of scale affect production costs?

  They lead to a proportionate saving in costs as production increases
• What is the relationship between the scale of production and cost savings in economies of scale?

  As the scale of production increases, costs tend to decrease proportionately
• What is structural unemployment?


  Unemployment from industrial reorganisation, typically due to technology change rather than fluctuation in supply and demand.
• What typically causes structural unemployment?

  It is typically caused by technology change rather than fluctuation in supply and demand.
• What is an example of structural unemployment?


  • A clothing manufacturing factory purchases specialised equipment.
  • This enhances the production assembly process.
  • Workers may become unemployed if their skills are no longer needed.
• What is the definition of a need?

  Something that is required to function properly
• What happens if a need is not met?

  We would suffer physically and/or emotionally
• What is the definition of "want" in consumer terms?


  Something that is not required but desired for the benefit or utility it brings to the consumer.
• How does a "want" differ from a "need"?

  A "want" is not required for survival but is desired for its utility.
• What is an economic agent?


  Someone who takes part in economic activity
• Who are considered economic agents?

  • Consumers
  • Workers
  • Firms
  • Government
• What is the tertiary sector primarily concerned with?

  The provision of retail and commercial services
• What is an economic resource?

  A factor used in the production of goods and services
• What are the main activities included in the tertiary sector?

  • Retail services
  • Commercial services
• What is a way of categorizing different economic actors in the chain of production?

  Economic sectors
• What are the economic groups mentioned in the study material?

  Cranes, Governments, Firms, Consumers, Worker
• What are the key economic groups listed in the study material?

  • Government
  • Firms
  • Consumers
  • Workers
• What is the primary sector in economics?

  The primary sector involves the extraction of raw materials.
• Why is the extraction of raw materials important in the production process?

  It provides the essential inputs needed for manufacturing goods.
• What is the definition of infrastructure?


  The basic systems and services such as transport and power supplies that a country or organisation uses in order to work efficiently.
• Why is infrastructure important for a country or organization?


  It enables them to work efficiently.
• What are examples of infrastructure mentioned in the study material?

  Transport and power supplies.
• What is the definition of opportunity cost?

  The value of the next best alternative forgone when making a choice.
• What is the economic problem primarily concerned with?

  How best to use limited resources to satisfy unlimited wants
• Why is the economic problem significant in economics?

  It highlights the challenge of resource allocation due to scarcity
• How does the concept of limited resources relate to unlimited wants in economics?

  Limited resources must be allocated efficiently to meet the infinite demands of people
• What is the process of identifying all available resources called?

  Resource Allocation
• What is a budget deficit?

  It occurs when government spending exceeds tax receipts.
• What does it mean when government spending exceeds tax receipts?

  It means the government spends more than it collects in taxes.
• How does a budget deficit affect government financial health?

  A budget deficit indicates that the government is borrowing to finance its spending.
• what is budget surplus?

  When government spending is less than taxation receipts.
• What is the definition of unemployment?


  An individual who is not employed and seeking employment but cannot find work
• Money


  Is anything that is generally accepted as a means of payment for goods and services
• Circular Flow of Income


  Is an economic model that depicts how money flows around the economy.
• Government spending

  Expenditure by government on goods and services
• Productivity


  Measure of economic performance that compares to the amount of goods and services produced
• Income


  Money that a person or entity receives in exchange for their labour of products
• Market share

  Percentage of an industry’s sales that a particular company owns
• Government

  a group of people who have the authority to govern a country