Economics and Business Year 8 test
revision 2025/2026
• Define economics, economic problem and scarcity - ANSWER-
ECONOMICS - ANSWER- The study of how people and society use resources to
satisfy their needs and wants.
ECONOMIC PROBLEM - ANSWER- People have limited resources yet unlimited wants
so we must make choices
SCARCITY - ANSWER- The management of resources is due to the economic problem
stated of having unlimited wants but limited resources. This is known as economic
scarcity.
• Discuss real world examples of the economic problem, market and scarcity -
ANSWER-
ECONOMIC PROBLEM - ANSWER- Want a pool not enough land
Want to build a house not enough workers (labor)
SCARCITY - ANSWER- Limited resource of water/ don't have a clean water supply -
water scarcity
Over fishing - scarcity of a type of fish
MARKET - ANSWER- want to buy a share in k-mart
want to buy a house
need an accountant
• Describe the operation of the labour, housing, stock and foreign exchange market -
ANSWER-
LABOUR - ANSWER- Workers sell their effort, skills and knowledge to an employer in
return for a wage
HOUSING - ANSWER- Where houses are bought, and sold to satisfy the basic need for
shelter. Houses can be bought, then leased out to a tenant for rent, so that the owner
(landlord) makes a profit. Many people take out a loan from the bank to pay for the
, house that the pay back over a 30yr period. The bank makes a profit by charging people
interest on the money it lends them.
STOCK - ANSWER- Shares (part ownership of a company) are bought and sold.
Shares entitle the shareholders to a portion of the company's profit. (dividends)
FOREIGN EXCHANGE - ANSWER- Where different currencies from around the world
are bought, and sold. Some people and businesses will trade currencies so that they
can make purchases or other payments in other nations using the local currency.
• Define circular flow model, interdependence, households and business sector. -
ANSWER-
CIRCULAR FLOW MODEL - ANSWER- Illustrates the interdependent relationship
between businesses and consumers within the economy.
INTERDEPENDENCE - ANSWER- The way different sectors within an economy rely on
each other. E.G. the firms cannot make goods and services without resources from the
households.
HOUSEHOLD SECTOR - ANSWER- The people who work for businesses in return for
a wage or income, which they then use to buy goods and services from other
businesses. Due to this, money, goods and services keep flowing through the economy.
This satisfies the needs and wants or consumers.
BUSINESS SECTOR - ANSWER- Producers are responsible for making and selling
goods and services. They aim to make a profit by selling items for a higher price than
the price of production. They need a variety of resources to produce goods and
services.
• Define the law of demand and demand - ANSWER-
LAW OF DEMAND - ANSWER- As the price of a good or service increases, the
demand decreases and vice versa.
DEMAND - ANSWER- The amount of a good or service consumers are willing to buy at
a particular price
• Define the law of supply and supply - ANSWER-
revision 2025/2026
• Define economics, economic problem and scarcity - ANSWER-
ECONOMICS - ANSWER- The study of how people and society use resources to
satisfy their needs and wants.
ECONOMIC PROBLEM - ANSWER- People have limited resources yet unlimited wants
so we must make choices
SCARCITY - ANSWER- The management of resources is due to the economic problem
stated of having unlimited wants but limited resources. This is known as economic
scarcity.
• Discuss real world examples of the economic problem, market and scarcity -
ANSWER-
ECONOMIC PROBLEM - ANSWER- Want a pool not enough land
Want to build a house not enough workers (labor)
SCARCITY - ANSWER- Limited resource of water/ don't have a clean water supply -
water scarcity
Over fishing - scarcity of a type of fish
MARKET - ANSWER- want to buy a share in k-mart
want to buy a house
need an accountant
• Describe the operation of the labour, housing, stock and foreign exchange market -
ANSWER-
LABOUR - ANSWER- Workers sell their effort, skills and knowledge to an employer in
return for a wage
HOUSING - ANSWER- Where houses are bought, and sold to satisfy the basic need for
shelter. Houses can be bought, then leased out to a tenant for rent, so that the owner
(landlord) makes a profit. Many people take out a loan from the bank to pay for the
, house that the pay back over a 30yr period. The bank makes a profit by charging people
interest on the money it lends them.
STOCK - ANSWER- Shares (part ownership of a company) are bought and sold.
Shares entitle the shareholders to a portion of the company's profit. (dividends)
FOREIGN EXCHANGE - ANSWER- Where different currencies from around the world
are bought, and sold. Some people and businesses will trade currencies so that they
can make purchases or other payments in other nations using the local currency.
• Define circular flow model, interdependence, households and business sector. -
ANSWER-
CIRCULAR FLOW MODEL - ANSWER- Illustrates the interdependent relationship
between businesses and consumers within the economy.
INTERDEPENDENCE - ANSWER- The way different sectors within an economy rely on
each other. E.G. the firms cannot make goods and services without resources from the
households.
HOUSEHOLD SECTOR - ANSWER- The people who work for businesses in return for
a wage or income, which they then use to buy goods and services from other
businesses. Due to this, money, goods and services keep flowing through the economy.
This satisfies the needs and wants or consumers.
BUSINESS SECTOR - ANSWER- Producers are responsible for making and selling
goods and services. They aim to make a profit by selling items for a higher price than
the price of production. They need a variety of resources to produce goods and
services.
• Define the law of demand and demand - ANSWER-
LAW OF DEMAND - ANSWER- As the price of a good or service increases, the
demand decreases and vice versa.
DEMAND - ANSWER- The amount of a good or service consumers are willing to buy at
a particular price
• Define the law of supply and supply - ANSWER-
