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Aydin - ECONOMICS A LEVEL MICRO > 4.1.1 Economic Methodology and the economic Problem > Flashcards

4.1.1 Economic Methodology and the economic Problem Flashcards

1
Q

Positive economic statements

A

Objective statements
Can be tested against facts to find if true or false

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2
Q

Normative economic statements

A

Subjective opinions
Cannot be tested against facts

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3
Q

Economic policy rests on…

A

normative judgements

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4
Q

A need is…

A

Something humans require to survive

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5
Q

A want is…

A

Something not essential for survival but which people feel improves standard of living

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6
Q

Economic welfare refers to…

A

the standard of living, or general well-being of individuals in society

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7
Q

Real gross domestic product is…

A

GDP per capita

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8
Q

Four factors of production are…

A

Capital
Enterprise
Land
Labour

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9
Q

Capital is…

A

Physical equipment to make other goods and services

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10
Q

Enterprise means…

A

Entrepreneurs who are taking a business risk by combining three other factors of production to produce a good or service

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11
Q

Land is…

A

All naturally occurring resources
Can be further divided into renewables and non-renewables

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12
Q

Labour is…

A

People involved in production known as human capital

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13
Q

Basic economic problem is…

A

Scarcity

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14
Q

Economic resources are…

A

Limited relative to society’s wants
So choices must be made on how to allocate these resources

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15
Q

Consumer goods are…

A

Goods that give satisfaction to customers

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16
Q

Capital goods are…

A

Those used to produce other goods (e.g. machinery and IT)

17
Q

Free market/Capitalist economy means…

A

Decisions are made by interactions of consumers and firms
No government intervention

18
Q

Command/Centrally planned economy means…

A

Decisions are made solely by the governments

19
Q

Opportunity cost is…

A

Cost of next best alternative that you give up when you have to make a choice

20
Q

PPC diagram is a…

A

Production Possibility Curve

21
Q

What does a PPC diagram show

A

Maximum combinations of two goods that can be produced by an economy, assuming all resources are fully employed and used efficiently

22
Q

Factors causing an outward shift of the PPC

A

Tech improvements leading to increased productivity of capital
New resources discovered
Improvements in education/training
Changes that lead to increase in working population

23
Q

Factors causing an inward shift of the PPC

A

Disasters such as earthquakes or floods
Wars
Global warming and climate change
Prolonged recession

24
Q

Economic Growth is…

A

An increase in productive capacity of an economy over time

25
Q

Productive efficiency is…

A

how well society uses its scarce resources to maximise outputs of goods and services

26
Q

Allocative efficiency is…

A

when a economy’s factors of production are used to produce the combination of goods and services that maximise society’s welfare

Aydin - ECONOMICS A LEVEL MICRO (2 decks)

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