GCSE economics paper 1

• What are the three economic groups?

  Consumers, Producers, Government
• What is a consumer?

  People that use goods or services. They are the end users of a product.
• What is a producer?

  individuals, groups of individuals or governments that supply goods or services.
• What is the government?


  looks to meet the needs of society
• What is meant by a good?

  A good is a tangible product - it can be seen or touched.
• What are factors of production?

  economic resources used in the production process to add value to factor inputs by creating factor outputs.
• What are the factors of production?

  Land, Labour, Capital and Enterprise
• What is land?

  natural resources from the earth sea and sky e.g. oil, coal, trees, the sea or farmland.
• What is labour?

  The available skill of all of the workforce in an economy.
• What is capital?

  the man aids to the production process. Machinery, tools, offices, factories.
• What is enterprise?

  the risk taken by an entrepreneur by combining the other factors of production to produce products that will be profitable.
• How are the factors of production combined?

  An entrepreneur will decide on the quantities of the other factors of production to combine and organizes them to create factor outputs.
• What is meant by scarce resources?

  when there isn't enough of something to satisfy all wants and needs.
• What is meant by unlimited wants?

  Unlimited wants are the infinite desire for something.
• What is a want?

  A want is something a consumer would like to have, but which isn't needed for survival e.g. a new phone, a laptop, makeup, a car.
• What is meant by the basic economic problem?

  when there are finite resources available to satisfy unlimited wats and needs.
• What are the three economic choices(about how to use scarce resources?)

  What should be produced? How should it be produced? Whom should it be produced for?
• What are economic choices?

  Those made due to the scarcity of resources. an option for the use of scarce resources
• What is the purpose of economic activity?

  the production of goods and services to satisfy the wants and needs of society.
• What is opportunity cost?

  the cost of the next best alternative given up
• What is meant by economic sustainability?

  the best use of resources in order to create responsible development or growth, now and into the future e.g. Employment, growth, government spending, taxation, costs of production, price
• 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?

  Environmental sustainability is the impact of development or growth where the effect on the environment is small and possible to manage, now and into the future-(non) renewable, pollution ,climate change, the availability of future resources.
• What is the role of producers?

  make and supply goods and services by combining the factors of production. They influence market prices. Often producers aim to sell goods and services to make profit. Help to influence market prices. Important in economic system as they employ workers and pay their wages.
• What is the role of individuals as producers?

  Individuals can be producers of non-market goods and services e.g. child-minding, cooking and cleaning. These producers may only work part time. Others are self-employed and work directly for themselves. These individuals produce goods and services that enter the market. They work for themselves and thus keep all the profits e.g. market traders, joiners, plumbers
• What is the role of firms as producers?

  Supply goods and services to consumers to make profit.
• How is the government a producer?

  Governments are producers of a range of services. They mainly supply services to society
• What is production?


  Production refers to the total output of goods and services produced by a firm or industry in a period of time.
• What is productivity?


  Productivity is one measure of the degree of efficiency in the use of the factors of production in the production process..
• Evaluate the importance of production for an economy.

  higher production may lead to an increase in employment, unless greater productivity causes it - increase in profits for firms and the industry- larger economies of scale- increase in market share if production of one firm increases as against that of other firms.- economic growth for economy- rise in standard of living as consumers have more goods and services to buy. However, Diseconomies of scale could also arise which results in average cost of production increasing as the firm grows in size.
• How is productivity measured?

  Productivity is measured as Total output/total input.
• In the case of individuals, what is higher productivity likely to be rewarded by?

  Higher wages. Increase in standard of living.
• Evaluate the importance of productivity for an economy

  lower average costs and increasing economies of scale (makes firm more competitive so that it can decrease prices and/or compete more effectively on a world scale. Will benefit the economy by increasing gross domestic product (GDP) through greater consumption and more exports. This then also improves the balance of payments. greater profits, allowing firms to pay higher wages to attract the best workers, and reinvest in new equipment and research. Investment will increase competitiveness and GDP. Higher wages will benefit the economy by encouraging people to get better qualifications and to improve their skills. However, if a firm increases productivity by using capital equipment in place of labour, this may increase unemployment. Will have immediate effect of causing the government to have to support the worker and their family through benefits - increased productivity leads to greater international competitiveness, which may lead to other countries retaliating, leading to a fall in GDP.- productivity increases total output of economy and is likely to lead to greater employment and higher wages, which then leads to greater government revenue through taxes. more competitive firms will lead to greater exports and thus further economic growth
• What are total costs?

  Total costs (TC) consists of the variable (VC) and fixed costs (FC) of production. all the costs of a firm
• How are total costs calculated?

  Total Costs (TC) = Total Fixed Costs (TFC) + Total Variable Costs (TVC).
• What is average cost?

  Average cost is the cost of producing a unit (unit cost of production).
• How is average cost calculated?

  Average cost (AC) = Total cost (TC) / Quantity (Q)
• What is total revenue?

  Total revenue (TR) is the total income of a firm from the sale of its goods or services.
• How is total revenue calculated?

  Total revenue (TR) = Price (P) x Quantity (Q)
• What is average revenue?

  Average revenue (AR) is the revenue per unit sold(same as the price of the product)