1.1.1-1.1.10 Flashcards
Microeconomics Definition
Looks at the economic behaviour of individuals, households and companies.
Macroeconomics Definition
Looks at the economics on a larger scale: regional, national, continental or even global.
Normative Economic Perspective Definition
focuses on the value of economic fairness or what the economy should be.
Positive economic perspective definition
objective and fact-based where the statements are precise, descriptive, and clearly measurable.
Define the term needs
Needs are goods and services essential for life.
Define the term wants
Wants are goods and services we would like to have that make life more enjoyable.
Identify the three resources that businesses use to produce goods and services
Natural resources
Labour resources
Capital resources
Natural resources refers to:
The productive inputs that occur in nature (e.g. soils, mineral deposits, forests, native animals etc.)
Labour resources refers to:
The intellectual skills knowledge and manual effort that people provide as members of the nation’s
Capital resources refers to:
Involve manufactured or producer goods. Here, capital is seen as the stock of past production.
Define the term ‘relative scarcity’.
The inherent economic problem in which society’s unlimited wants and needs outnumber limited resources”
Provide an example of relative scarcity
Oil is a prime example of relative scarcity. While it exists in finite quantities, its scarcity stems primarily from the high global demand exceeding the current rate of discovery and extraction. This imbalance creates an economic value attached to oil, making it a scarce resource.
Define the term opportunity cost
The value of the next best option foregone
What is technical efficiency
Technical efficiency refers to how effectively a company or system maximizes production based on a limited number of inputs
What is allocative efficiency
Allocational or allocative efficiency is an efficient market whereby all goods and services meet the needs and wants of society.
