1 Economic problem Flashcards

1
Q

Which types of statements are there?

A

Positive and Normative

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2
Q

Define economic welfare

A

the standard of living or general well-being of people in the society

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3
Q

Factors of production

A

Land, labour, capital, enterprise

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4
Q

What is basic economic problem?

A

Scarcity compared with society’s unlimited wants

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5
Q

Define opportunity cost

A

the cost of the next best alternative that you give up when you have to make a choice

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6
Q

How does PPF look like?

A

y- axis = consumer goods; x-axis = capital goods

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7
Q

Factors that cause PPF to shift outwards

A

-technological improvements
-discovery of new resources
-improvements in education and training
-increase in working population

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8
Q

Factors that cause PPF to shift inwards

A

-disasters such as earthquakes
-wars
-global warming
-a prolonged recession

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9
Q

Define economic growth

A

an increase in the productive capacity of an economy over time

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10
Q

Define productive efficiency

A

when maximum output is produced from available factors of production and when it is not possible to produce of more good or service without producing less of another

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11
Q

Define allocative efficiency

A

when an economy’s factors of production are used to produce the combination of goods and services that maximises society’s welfare

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