paper 1

• consumers are the buyers of goods and services
• consumers are influenced by how much they will benefit from a good or a service
• producers are the sellers of goods and services
• a government is a group of people who have the power to run a country
• land includes raw materials that are naturally occuring
• labour is the workforce
• capital is the man made aid to production
• enterprise is the function performed by entrepreneurs, they organize the factors of production create goods and services and bear the risks of the production process
• what is the economic problem?

  unlimited wants for goods but are only scarce resources to make them
• unlimited wants describes the desire that consumers could have for an infinite amount of goods if they had no limits such as affordability
• an opportunity cost is the giving up of the next best alternative when it comes to making a decision
• what is an economic choice?

  an option for the use of selected scarce resources
• what is economic sustainability?

  the best use of resources in order to create responsible development or growth, now and into the future
• what is social sustainability?

  the impact of development or growth that promotes an improvement in quality of life for all, now and into the future
• what is environmental sustainability?

  the impact of development or growth where the effect on he environment is small and possible to manage, now and into the future
• a market is a way of bringing together buyers and sellers to buy and sell goods and services
• a market economy is an economy in which scarce resources are allocated by the market forces of supply and demand
• what is the primary sector?

  the direct use of natural resources including extraction of basic materials and goods from land and sea
• what is the secondary sector?

  all activities in an economy concerned with either manufacturing or construction
• what is the tertiary sector?

  all activities in an economy that involve the idea of service
• the production of goods involves using raw materials and/or semi-finished goods to make a whole good
• the production of services is the process of providing a service to a consumer
• the product market deals with goods and services while the factor market is concerned with the factors of production
• what is a factor market?

  it is where the services of the factors of production are bought and sold
• what is a product market?

  it is where final goods and services are offered for sale and bought by consumers, businesses and the public sector
• specialization allows producers to gain economies scale
• specialization by individuals within a work place is called division of labour
• demand is the willingness and ability to purchase a good or service at the given price at a given timw
• what is the law of demand?

  normally, the quantity demanded varies inversely with the price
• individual demand is the demand for a good or a service by an individual consumer
• market demand is the total demand for a good or a services found by adding together all individual demands
• a demand curve is a graph showing how the demand for a product varies with changes In its price
• a shift of the demand curve is a complete movement of the existing demand curve either outward, to the right, or inward, to the left
• a movement along the demand curve occurs when the price changes, leading to a movement up or down the existing curve
• what is a subsidy?


  an amount of money a government gives directly to firms to encourage production and consumption
• what is a tax?

  a compulsory payment to the government
• price elasticity of demand measures the responsiveness of quantity demanded to a change in price of the product
• what is elastic demand?

  when the percentage change in quantity demanded is greater than the percentage change in price
• what is inelastic demand?

  when the percentage change in quantity demanded is less than percentage change in price
• supply is the ability and willingness of a firm to provide goods and services at each given price, in a given time period