1.1 Nature of economics Flashcards
a) Thinking like an economist: the process of developing
models in economics, including the need to make
assumptions
b) The use of the ceteris paribus assumption in building
models
c) The inability in economics to make scientific experiments
a) Distinction between positive and normative economic
statements
b) The role of value judgements in influencing economic
decision making and policy
a) The problem of scarcity – where there are unlimited
wants and finite resources
b) The distinction between renewable and non-renewable
resources
c) The importance of opportunity costs to economic agents
(consumers, producers and government)
a) The use of production possibility frontiers to depict:
o the maximum productive potential of an economy
o opportunity cost (through marginal analysis)
o economic growth or decline
o efficient or inefficient allocation of resources
o possible and unobtainable production
b) The distinction between movements along and shifts in
production possibility curves, considering the possible
causes for such changes
c) The distinction between capital and consumer goods
a) Specialisation and the division of labour: reference to
Adam Smith
b) The advantages and disadvantages of specialisation and
the division of labour in organising production
c) The advantages and disadvantages of specialising in the
production of goods and services to trade
d) The functions of money (
as a medium of exchange, a
measure of value, a store of value, a method of deferred
payment)
