1.1 Nature of economics Flashcards
Barter
swapping one good for another without the use of money
Base period
the period, such as a year or a month, with which all other values in a series are compared.
Basic economic problem
resources have to be allocated between competing uses because wants are infinite whilst resources are scarce.
Capital
a factor of production is the stock of manufactured resources used in the production of goods and services.
Capital productivity
output per unit of capital employed.
Ceteris Paribus
all things being equal; the assumption that, whilst the effects of a change in one variable are being investigated, all other variables are kept constant.
Command economy
an economic system where the government, through a planning process allocates resources in society.
Consumer goods
goods and services that are used by people to satisfy their needs and wants.
Division of labour
specialisation by both workers, who perform different tasks at different stages of production to make a good or service in cooperation with other workers.
Economic goods
goods that are scarce because their use has an opportunity cost.
Economic system
a complex network of individuals, organisations and institutions and their social and legal interrelationships which allocates resources.
Enterprise
as a factor of production is the seeking out of profitable opportunities for production and take risks in attempting to exploit these.
Entrepreneurs
individuals who seek out profitable opportunities for production and take risks in attempting to exploit these.
Factors of production
the inputs top the production process: land, labour, capital and enterprise.
Fixed capital
– economic resources such as factories and hospitals which are used to transform working capital into goods and services.
Free goods
goods that are unlimited in supply and which therefore have no opportunity cost.
Free market economy
an economic system that resolves the basic economic problems mainly through the market mechanism.
Human capital
the value of the productive potential of an individual or group or workers.
Index number
an indicator showing the relative value of one number to another from a base value of 100.
Labour
as a factor of production is the workforce
Labour productivity
output per worker
Land.
as a factor of production is all natural resources.
Market
any convenient set of arrangements by which buyers and sellers communicate to exchange goods and services.
Money
any item such as a coin or bank balance which fulfils four functions: a medium of exchange, a measure of value, a store of value and a method of deferred payment.
