Free WACE Year 11 Economics Flashcard Review
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What does economics study?
Allocation of scarce resources among competing uses to satisfy wants.
How does microeconomics differ from macroeconomics?
Microeconomics studies individuals and particular markets; macroeconomics studies economy-wide outcomes.
Why can a wealthy person face scarcity?
Time and other resources remain limited relative to competing wants.
Which rejected alternative determines opportunity cost?
The next best feasible alternative, rather than all rejected options combined.
What are the main decision-making steps?
Specify objectives and constraints, identify alternatives, gather evidence, compare benefits and costs, choose, then review.
How is marginal benefit calculated?
Change in total benefit divided by change in activity.
When does another unit reduce net benefit?
When its marginal cost exceeds its marginal benefit.
Why use a simplified economic model?
To isolate a relationship and make conditional explanations or predictions.
What does a point inside a PPF indicate?
Attainable production with idle resources or inefficient resource use.
What distinguishes a PPF shift from movement along it?
A shift changes capacity; movement along it reallocates given resources.
Name key market-economy features.
Private property, choice, voluntary exchange, price signals, profit incentives and competition.
What makes an economic recommendation convincing?
Evidence, a causal mechanism, comparison of benefits and opportunity costs, and explicit assumptions.
What condition accompanies the law of demand?
Other influences are held constant: ceteris paribus.
How are individual demands aggregated?
Add quantities at each common price, horizontally.
Which axes belong on a demand diagram?
Price per unit vertically; quantity per period horizontally.
What does a lower own price cause?
An expansion of quantity demanded along the existing curve.
What does a rightward demand shift mean?
More is demanded at each unchanged price.
How does higher income affect a normal good?
Demand shifts right, other things equal.
How does higher income affect an inferior good?
Demand shifts left, other things equal.
Why can population composition matter?
Different groups demand different products; more children may raise school-supply demand.