1. Economic Methodology and the Economic Problem Flashcards
What is a Positive Statement?
A statement that can be tested against the facts to be declared as true or false
What is a Normative Statement?
A subjective opinion
What is Economic Welfare?
The standard of living or general well-being of people in society.
What are the four factors of production?
Land
Capital
Labour
Enterprise
What is Land? (Factors of Production)
Natural resources such as fertile land, minerals, water, etc…
What is Capital? (Factors of Production)
Man-made physical equipment to make other goods and services (machinery)
What is Labour? (Factors of Production)
People involved in production, sometimes called human capital.
What is Enterprise? (Factors of Production)
Individuals who take a business risk to create the good/service using the other 3 factors of production.
What is the basic economic problem?
Scarce resources, unlimited wants.
What is an opportunity cost?
The cost of the next best alternative that you give up when making a choice