Jie Ke
CIE3M – Grade 12 Economics Exam
Thanks, Jansen!
Fully Formatted PDF with diagrams Econ-Exam-Notes
Economics Exam Notes
What is economics?
Social science that studies how people use scarce resources to satisfy their unlimited wants
Macroeconomics
Examines economy as a whole (the forest) rather than individual units.
Concerns itself with aggregate behaviour
Microeconomics
Examines behaviour of individual economic units (tree in forest), determines relative prices
Scarcity and Choice
Scarcity and unlimited wants lead to choice
Factors of production
Land (natural resources), Capital (manufactured goods to assist), Labour (mental, physical efforts of people), Entrepreneurship (managerial and decision making skills)
Opportunity cost
Other opportunities/alternatives that are sacrificed
Production Possibility Curve
Scarcity (trade-off)
Shows maximum output of two goods that an economy can produce if it uses all its resources
If line is linear, opportunity cost is constant
Increasing opportunity cost is more common so line is usually curved outwards
To produce more of something, more of something else has to be given up
Points A, B, C represent the combinations of houses and automobiles that can be produced together with full employment of all resources (perfectly efficient economy produces economy)
Moving from Point U to Point A will have no opportunity cost as it will be using idle resources and no sacrifice is made
Point Q (by pushing the curve forward) is unattainable in the economy and is only attainable when there is an advance is technology and increase in resources (economic growth)
Creates a new PPC and parallel to original one if increases in both sectors
If only one, lopsided
Circular Flow
Factor market
Where factors of production are sold
Product market
In which firms sell their output of goods and services
Real flows
Flows of goods and services and resources
Nominal flows
Flows of expenditure and income
Thanks, Jansen!
Fully Formatted PDF with diagrams Econ-Exam-Notes
Economics Exam Notes
What is economics?
Social science that studies how people use scarce resources to satisfy their unlimited wants
Macroeconomics
Examines economy as a whole (the forest) rather than individual units.
Concerns itself with aggregate behaviour
Microeconomics
Examines behaviour of individual economic units (tree in forest), determines relative prices
Scarcity and Choice
Scarcity and unlimited wants lead to choice
Factors of production
Land (natural resources), Capital (manufactured goods to assist), Labour (mental, physical efforts of people), Entrepreneurship (managerial and decision making skills)
Opportunity cost
Other opportunities/alternatives that are sacrificed
Production Possibility Curve
Scarcity (trade-off)
Shows maximum output of two goods that an economy can produce if it uses all its resources
If line is linear, opportunity cost is constant
Increasing opportunity cost is more common so line is usually curved outwards
To produce more of something, more of something else has to be given up
Points A, B, C represent the combinations of houses and automobiles that can be produced together with full employment of all resources (perfectly efficient economy produces economy)
Moving from Point U to Point A will have no opportunity cost as it will be using idle resources and no sacrifice is made
Point Q (by pushing the curve forward) is unattainable in the economy and is only attainable when there is an advance is technology and increase in resources (economic growth)
Creates a new PPC and parallel to original one if increases in both sectors
If only one, lopsided
Circular Flow
Factor market
Where factors of production are sold
Product market
In which firms sell their output of goods and services
Real flows
Flows of goods and services and resources
Nominal flows
Flows of expenditure and income