Economics Theme 1 Edexcel ACTUAL UPDATED
QUESTIONS AND CORRECT ANSWERS
Economics the allocation of scarce resources to meet
unlimited human wants
what are the five factors of land- used for production
production? labour-human capital
capital - manmade assets which have been created
to help produce goods- the creation of capital is
called investment
enterprise -helps to produce goods and services
more efficiently- takes risks
Samuelson's three questions 1. what to produce -best combination of good and
services to meet human needs
2. How to produce? - how many factors of
production should be used to create the desired
output of goods and services
3. For whom to produce?-who will get the output
from the countries economic activity
,Productivity it measures how efficiently production inputs, such
as labour and capital, are being used in an
economy to produce a given level of output.
(The output per unit of input.)
The Economic Problem Resources are scarce but wants are infinite.
Scarcity The world's resources are limited, there are only
limited amounts of land, water, oil, food, etc..
Therefore, resources are scarce.
Marginal Cost refers to the opportunity cost of producing one
more unit of a good/service
This is because economics we make decisions
about what to produce or consume one at a time
as conditions are constantly changing and it would
be highly irrational if we didn't consider this.
What increases growth? -increasing the quality and quantity of your factors
of production
-technological innovation
- improved production methods-specialisation
-increased labour force- more migrants
-education and training
-capital investment- need some resources
allocated to capital goods to allow growth
The Law of Increasing costs As more of one good is substituted for another the
greater the opportunity cost if the resources are
fully employed in the economy
Consumer Goods Goods designed for use by final consumers.
, Capital Goods Goods intended for use in production, rather than
by consumers e.g equipment, machinery
investing in capital goods may mean that an
economy has to sacrifice current production of
consumer goods. However, in the future may pay
off and boost the economy's ability to produce
more int he future resulting in economic growth
Possibility production frontier The maximum number of goods an economy can
achieve when all its resources are fully and
efficiently employed, given the level of technology.
An inward shift of a PPF - natural disaster e.g a hurricane could destroy
loads of factories and thus lower production.
Opportunity Cost The value of next best alternative foregone.
Economic Growth If an economy experiances an increase or
improvement in its resources, its productive
potential has increased.
Asymmetric Growth when as an economy can grow because of an
increase in productivity in one sector of the
economy. This could be due to new technology
that has improved the quantity of output.
Renewable Resources A resource whose stock level can be replenished
naturally over a period of time.
QUESTIONS AND CORRECT ANSWERS
Economics the allocation of scarce resources to meet
unlimited human wants
what are the five factors of land- used for production
production? labour-human capital
capital - manmade assets which have been created
to help produce goods- the creation of capital is
called investment
enterprise -helps to produce goods and services
more efficiently- takes risks
Samuelson's three questions 1. what to produce -best combination of good and
services to meet human needs
2. How to produce? - how many factors of
production should be used to create the desired
output of goods and services
3. For whom to produce?-who will get the output
from the countries economic activity
,Productivity it measures how efficiently production inputs, such
as labour and capital, are being used in an
economy to produce a given level of output.
(The output per unit of input.)
The Economic Problem Resources are scarce but wants are infinite.
Scarcity The world's resources are limited, there are only
limited amounts of land, water, oil, food, etc..
Therefore, resources are scarce.
Marginal Cost refers to the opportunity cost of producing one
more unit of a good/service
This is because economics we make decisions
about what to produce or consume one at a time
as conditions are constantly changing and it would
be highly irrational if we didn't consider this.
What increases growth? -increasing the quality and quantity of your factors
of production
-technological innovation
- improved production methods-specialisation
-increased labour force- more migrants
-education and training
-capital investment- need some resources
allocated to capital goods to allow growth
The Law of Increasing costs As more of one good is substituted for another the
greater the opportunity cost if the resources are
fully employed in the economy
Consumer Goods Goods designed for use by final consumers.
, Capital Goods Goods intended for use in production, rather than
by consumers e.g equipment, machinery
investing in capital goods may mean that an
economy has to sacrifice current production of
consumer goods. However, in the future may pay
off and boost the economy's ability to produce
more int he future resulting in economic growth
Possibility production frontier The maximum number of goods an economy can
achieve when all its resources are fully and
efficiently employed, given the level of technology.
An inward shift of a PPF - natural disaster e.g a hurricane could destroy
loads of factories and thus lower production.
Opportunity Cost The value of next best alternative foregone.
Economic Growth If an economy experiances an increase or
improvement in its resources, its productive
potential has increased.
Asymmetric Growth when as an economy can grow because of an
increase in productivity in one sector of the
economy. This could be due to new technology
that has improved the quantity of output.
Renewable Resources A resource whose stock level can be replenished
naturally over a period of time.
