| What are the three factors of production? | Land, labor and capital |
| What is marginalism? | It is the additional costs of production on top of already sunk costs. |
| What are sunk costs? | Rent, electricity, wages etc. Already accounted for costs |
| What is an efficient market? | One in which profit and is rare and the opportunity disappears fast |
| Whats the difference between micro and macro economics | Micro = people and their decisions, macro = larger scale such as businesses and government decisions |
| What is normative economics? | Examining economic outcomes and making an evaluation on whether they're good or bad. ie is a higher minimum wage good? |
| What is positive economics? | Attempts to understand the principles of economics and why things are happening. eg what happens when the minimum wage increases? |
| Define Ceteris Paribus | An economic situation in where all but two variables are held constant. |
| Define Post Hoc Fallacy | PHF is looking at two chronological events and incorrectly assuming one led to the other. |
| What is Fallacy of Composition? | Incorrectly believing that because something is true in one case that it will be true in all cases. |
| What are some measures we can use to judge an economy? | Efficiency, equity, economic growth and economic stability. |
| What are the three fundamental questions for any economy? | What to produce, how to produce and who to produce for. |
| What are some characteristics of a Laissez-faire economy? | Limited gov intervention, customer sovereignty, decentralised output distribution and free enterprise |
| What are some characteristics of a free market system? | Price determined by seller, price mechanism, income distribution depends on purchases. |
| What is a mixed economy? | Essentially an economy based on Laissez-faire principles but with tighter gov regulation. |
| What is a public good? | One provided by the government. Freely accessible to everyone and has no competition. |
| What does lack of competition cause? | A monopoly, where one or a small number of businesses will have large enough market share to control the entire market pricing and supply. |
| What are externalities? | A member involved without being the consumer or producer. eg environmental impact due to factory production. |
| What are merit goods? | Goods that everyone is entitled to regardless. Food, water and shelter. |
| What is a command economy? | An economy where everything is owned/operated by the government and they have total control over economic decisions. |
| What is the difference in a firm and a household? | A firm produces while a household consumes. |
| Demand is described as ... | The amount of resources a household is willing and able to acquire. |
| What is a absolute advantage? | When a competitor is able to make a similar product with less resources or in less time. |
| What is a comparative advantage? | A business or nation will have a comparative adv. if they can produce a good for a lower opportunity cost than another business. |
