4.1 Flashcards
what is a social science
observation of human behaviour
what is a normative statement
they are opinionised statements
what is an economic model
simplified description of reality,designed to yield hypotheses about economic behaviour that can be tested
what is ceteris l’airbus
all other things being equal
why do economists find it hard to conduct science expirements
there are difficulties in carrying out expirements under controlled conditions to test a hypothesis
words for a positive statement
will, is
words in normative statements
ought to
must
should
an example of a value judgement
is whether or not to increase the minimum wage it’s a value judgement because it involves a decision about how much ppl should be paid
what is scarcity
means the state of being in short supply of a product or service
what is a renewable resource
a source that can be replenished faster than it is used up like wood wind solar energy
what is a non renewable resource
a resource that is used up before it’s replenished like:
crude oil
natural gas
4 factors of production
capital
land
labour
enterprise
what is land
it is the land that business uses
rent is the reward examples are
clay
wood
forestry
what is the reward for labour
wages
what is the reward for capital
interest
what is the reward for enterprise
profit
why do opportunity costs exist
because of scarcity anytime we do something we have to do forgo doing something else we wanted
an example of opportunity cost
the government spending money on education rather than healthcare
what is economics
using scarce resources to satisfy unlimited wants
what is labour
the people that work for the business
capital
man made aid to production
what are capital goods
physical assets that a company uses in production process to manufacture products that the consumer will use later
what are consumer goods
goods purchased for consumption and not used later to produce another consumer food
what are free goods
goods that are not scarce and available without limit
what are consumer durables
goods that do not need to be purchased very often and last atleast 3 years
what are non durables
consumer goods in an economy that are consumed in one use or is used up over a short period of time like water
what does the PPC show
the maximum output in an economy
what happen if the product is underneath the PPC
it is inefficient and it isn’t using all of its resources
what happens if the product is above the PPC
it is unobtainable
what does an outward shift show in PPF
balanced economic growth
what is a natural science
scientists observe aspects of the universe
how economists come up with a theory
1)observe consumer behaviour
2)form hypothesis of how consumers spend
3)make predictions form hypothesis
4)use evidence to test predictions
5)theory then gets tested more so no cheats
what is microeconomics
the study of how to best solve the basic economic problems which are scarce resources
what are the 3 choices on how we allocate our resources
what to produce
how to produce
for whom to produce for
how to determine if the opportunity cost was worth it
the value of our opportunity cost is greater than the value of our current choice we made then it’s a bad decision and if the value of our current choice is better than the opportunity cost it would be a good decision
what is demand
the quantity that the consumers are willing to spend on a good or service
what is derived demand
when the demand comes from something else eg printer, printing ink
if the price changes in a demand curve what happens
causes a movement along the demand curve
what if something else changes and prices stay the same
causes a shift of the demand curve
what is contraction
demand decreasing
what is expansion
demand increases
how does a market exist
wherever there are buyers and sellers of a particular good buyers DEMANDS goods from the market whilst sellers supply goods to the market
what is effective demand
the willingness and ability of consumers to purchase goods at different prices
composite demand
where goods have more than one use
what is joint demand
the combined demand of two or more interlinked goods
what is relationship between price and demand
there is an inverse relationship between price and demand
when price goes down demand goes up
lower prices make it more affordable for customers
what might cause an shift in demand
Population
Income
Related Goods
Advertising
Tax
Expectations
