economics paper 1

• Consumer


  A person or organisation that directly uses a good or service
• Good


  A tangible product, i.e. a product that can be seen or touched
• Government

  A political authority that decides how a country is run and manages its operation
• Producer

  A person, company or country that makes grows or supplies goods and or services
• Service


  Intangible; a product that cannot be seen or touched
• Production


  The total output of goods and services produced by a firm or industry in a time period
• Factors of production


  • Land
  • Labour
  • Capital
  • Enterprise
• Land


  The factor of production that is concerned with the natural resources of an economy, such as farmland and mineral deposits
• Labour


  The factor of production that is concerned with the workforce of an economy in terms of both physical and mental effort involved in production
• Capital


  The factor of production that relates to the human-made aids to production
• Enterprise


  The factor of production that takes a risk in organising the other three factors of production. The individual who takes this risk is known as an entrepreneur
• Scarce resources

  When there is an insufficient amount of something to satisfy all wants
• Unlimited wants


  The infinite desire for something
• Need


  Something a consumer has to have to survive
• Want


  Something a consumer confidence would like to have, but which is not essential for survival
• Economic problem

  How to best use limited resources to satisfy the unlimited wants of people
• Opportunity cost


  The next best alternative given up when making a choice
• Economic choice


  An option for the use of selected scarce resources
• Economic sustainability


  The best use of resources in order to create responsible development or growth, now and into the future
• Social sustainability


  The impact of development or growth that promotes an improvement in quality of life for all, now and into the future
• Environmental sustainability


  The impact of development or growth where the effect on the environment is small and possible to manage, now and into the future
• Market


  A way of bringing together buyers and sellers to buy and sell goods and services
• Market economy


  An economy in which all scarce resources are allocated by the market forces of supply and demand
• Sectors of the economy

  • Primary
  • Secondary
  • Tertiary
• Primary sector


  The direct use of natural resources, such as the extraction of basic materials and goods and from land and sea
• Secondary sector


  All activities in an economy that are concerned with either manufacturing or construction
• Tertiary sector


  All activities in an economy that involve the idea of a service
• Factor market


  Market in which the services of the factors of production are bought and sold
• Product market


  Market in which final goods and services are offered to consumers, businesses and the public sector
• Exchange


  The giving up of something that the individual or firm has in return for something they wish to have but do not possess
• Specialisation


  The process by which individuals, firms, regions and whole economies concentrate on producing those products that they are best at producing
• Division of labour


  Where the workers specialise in, or concentrate on, one are of the production process
• Demand


  The willingness and ability to purchase a good or service at the given price in a given time period
• Law of demand


  For most products the quality demanded varies inversely with its price
• Individual demand


  The demand for a good or service by an individual consumer
• Market demand


  The total demand for a good or service, found by adding together all individual demands
• Movement along the demand curve


  When the price changes, leading to a movement up or down the existing demand curve
• Shift of the demand curve

  A complex movement of the existing demand curve either outward (to the right) or inward (to the left)
• Subsidy


  An amount of money the government gives directly to firms to encourage production and consumption
• Tax


  A compulsory payment to the government