National 5 Economics Verified Answers

National 5 Economics Verified Answers Identify the three agents of the economy ️️Governments, firms and consumers Identify the three reasons for unlimited wants ️️Greed, Technological advancement and replacement How would you describe the shape of a demand curve ️️Slopes down from left to right Identify four types of unemployment ️️Seasonal, frictional, structural and regional Identify the economic cycle ️️Boom, recession, slump and recovery What is the basic economic problem? ️️The basic economic problem is that our wants are unlimited but our resources in order to produce our wants are limited. Our resources are either human, man- made and natural. Our wants are unlimited due to human greed and technological advancement. What three questions every economy must answer? ️️What to produce How to produce Who to produce for Identify three classifications of resources ️️Man-made Human Natural Name all the factors of production ️️Land Labour capital enterprise Name all the returns to the factors of production ️️Rent Wages Interest Profit Define opportunity cost ️️The next best alternative given-up What industries are in the primary sector? ️️The extraction of natural resources for example fishing and coal mining What industries are in the secondary sector? ️️Manufacturing for example making cars or building a house What industries are in the tertiary sector? ️️Services for example banking, teacher and accountants Describe one possible opportunity cost for a firm ️️If a firm had a choice of making iphones or computers and the firm make iphones, then computers will be the opportunity cost. Describe one possible opportunity cost for an individual ️️If an individual had a choice between a roll and a panini and the person chooses a panini, the roll will be the opportunity cost. Compare a need and a want ️️A need is something you require to survive whereas a want is something which make your life more comfortable. Describe the factors which determine demand ️️Change in population- if there was a baby boom there will be an increase in population. Change in advertising- if a firm decides to move from radio to tv, this is a change in the population. Change in income- if HMRC decreases the rate of income tax, then disposable income will increase then therefore they are more likely to buy more goods and services. State the definition of law of Diminishing Returns ️️The law states that as a firm adds more of a factor of production, productivity increases only to an extend, when it begins to decrease. What are fixed costs? ️️Are costs that do not change with output and will still exist output in zero. What are Variable costs? ️️costs that change as output changes What are total costs? ️️fixed costs + variable costs What is short run? ️️An unspecified period of time where there is at least one fixed factor of production in terms of quantity or size. What is long run? ️️Is when a firm can employ more of all the factors of production. Define Marginal utility ️️The satisfaction gained from consuming an extra unit of the product. Define Total utility ️️The total satisfaction gained from consuming a product in a period of time. Define Effective demand ️️Want + ability to pay State the law of Demand ️️The law of demand states that more of a good will be demanded at a lower price then at a higher price for a normal good. What are the two types of changes in demand called? ️️Extension, contra