4.1.1 Economic Methodology and the Economic Problem Flashcards
positive statement
objective statement that can be tested and rejected by facts and evidence
normative statement
subjective statement and an opinion that carries value judgement
factors of production
scarce in supply, so usage incurs an opportunity cost, and an input into the production process of goods and services
labour productivity
amount of goods and services a group of producers can produce in a given time. output per worker
consumer good
good consumed by individuals to satisfy needs and wants
capital good
goods used in the production of goods and services
productivity
average measure of the efficiency of production. output per unit of input
economic problem
how best to make decisions about allocation of scarce resources among competing uses to maximise economic welfare
resource allocation
when available fops are assigned to produce different goods and services
opportunity cost
next best alternative forgone when a choice is made
production possibility curve
shows the maximum possible output combinations of 2 goods that can be produced when all resources are fully and efficiently employed
law of increasing opportunity cost
as the production of one good increases, the opportunity cost in terms of the other good will increase
productive efficiency
whole economy - occurs when it is impossible to produce more of one good without producing less of another
firm - occurs when average total cost of production is minimised
allocative efficiency
when the available economic resources are used to produce a combination of goods and services that best matches people’s preferences
actual economic growth
measured by the annual percentage change in a country’s real GDP
