1.1 (nature of economics) Flashcards
1
Q
economics as a social science
A
looks at human interaction and the study of society, harder to test theories as factors can change
2
Q
ceteris paribus
A
all factors are held constant - means we can focus on one factor only
3
Q
positive statement
A
can be proven true or false using evidence
4
Q
normative statement
A
based on opinions, can’t be tested using evidence
5
Q
the economic problem
A
problem of scarcity, unlimited demand but scarce supply
6
Q
opportunity cost
A
the next best opportunity foregone
7
Q
production possibility frontier
A
- maximum potential output of 2 goods / services when all resources are used fully and efficiently
8
Q
productive efficiency
A
producing at lowest cost
9
Q
allocative efficiency
A
producing at maximum benefit to consumer
10
Q
specialisation
A
when an individual firm or country concentrates on the production of a limited range of goods or services
11
Q
free market
A
- allocate resources through the workings of the price mechanism
- limited / little gov intervention
- gov may try to protect the value of a currency
e.g. Singapore, Switzerland, Ireland
12
Q
command economy
A
- ‘communist’ economic system
- set production targets and growth rates to what they believe people want
- income and wealth distribution decided by the state
e.g. North Korea, Cuba
