1: Economic Methodology And The Economic Problem Flashcards
Need
Something that is necessary for humans survival such as food
Want
Something that is desirable, such as fashionable clothes, but is not necessary for human survival
Economic welfare
The economic well-being of an individual, a group within society, or an economy
Economic system
The set of institutions within a community decides what, how and for whom to produce
Market economy
An economy in which goods and services are purchased through the price mechanism in system of markets
Command economy (also known as planned economy)
An economy in which government officials or planner allocate economic resources to firms and other productive enterprises
Mixed economy
An economy that contains both large market sector and a large non-marker sector in which planning mechanism operates.
Production
Converts inputs or factor services into output of goods and services
Factors or production
Land, labour, capital and enterprise
What is capital good aka producer good
A good which is used in the production of other goods or services
What is a Fundamental economic problem
It is how to best make decisions about the allocation of scarce resources among competing uses so as to improve and maximise human happiness and welfare
What is scarcity
The results from the fact that people have unlimited wants but resources to meet these wants are limited. In essence, people would like to consume more goods and service than the economy is able to produce with its limited resources.
Opportunity cost
The cost of giving the next best alternative
