3.1 Flashcards
what are Positive statements
“Will” “is”
- are objective
- They can be tested
- factual evidence
what are normative statements
- Based on value judgements
- Subjective
- opinion based
- should
what is the central purpose of economic activity
the production of goods and services to satisfy needs and wants
what are the key economic decisions
-what to produce
-how to produce
-who is to benefit from the goods and services produced
what is a scarce resource
a low supply and high demand of a limited resource
what is an opportunity cost
the cost of the next best alternative foregone when a choice is made
what is the basic economic problem
resources are scarce and this results from limited resources and unlimited wants
what is Diminishing marginal utility
an extra unit of the good is consumed. the marginal utility (the benefit derived from consuming the good) falls
ceteris paribus
all other things are unchanged or equal
what does a PPF show
Maximum possible production of 2 goods/Services with given factors of production
