2 - Nature of Economics Flashcards
Define ‘economics’
Studies how economic agents maximise production and consumption of goods/services to improve consumer satisfaction/standard of living with the problem of scarcity.
Define ‘microeconomics’
Study of economic decisions taken by economic agents.
Define ‘macroeconomics’
Study of the interrelationship between economic variables at an aggregate level.
Define ‘positive statement’
Statement that is factual, can be challenged and testable against facts.
Define ‘normative statement’
Statement which include value judgement, cannot be testable against facts.
Define ‘opportunity cost’
Value of the next best alternative forgone
Define ‘renewable resources’ and ‘non-renewable resources’
Renewable: Natural resources that can be replenish
Non renewable: Renewable resources that once used, cannot be replenish
Define ‘capital’, ‘enterprise’, ‘land’, ‘labour’
Capital: Man-made resources for further production
Enterprise: entrepreneur who bears business risk and organisation. Takes account the other 3 F.O.P.
Land: raw materials used for production
Labour: human effort used in production
What are the 3 basic economic questions?
What, how, and for whom to produce.
Define ‘production possibility frontier’
Curve that shows the maximum combination of goods and services that can be produced in a set period of time given available resources.
Define ‘consumer goods’
Goods consumed by consumers.
Define ‘producer/capital goods’
Man-made resources/goods for further production
Define ‘division of labour’
Production broken down into sequences of stages, workers assigned to a particular stage.
Define ‘specialisation’
Concentration of worker, firm, region on a narrow range of goods and services.
Define ‘productivity’
Measured by the output/production of goods or services per input.
