(AS Level) 1 Basic Economic Ideas and Resource Allocation Flashcards
What is the Fundamental Economic Problem?
Scarce resources but unlimited wants, sometimes called the Basic Allocation Problem
What are Wants?
Goods and Services that are not necessary for survival but people may still want.
What are Needs?
Goods and Services necessary for survival.
What is Scarcity?
When wants and needs exceed limited resources available.
What is a Choice?
Because resources are scarce, choices have to be made on how to use them for many competing uses.
What is Opportunity Cost?
The cost expressed in terms of the best next alternative forgone when a choice is made.
What does the Fundamental Economic Problem Lead to?
The Basic Questions of Resource Allocation
What are the Basic Questions of Resource Allocation?
- What to Produce
- How to Produce
- For Whom to Produce
What are Positive Statements?
These are statements made by economists where there is no opinion/value judgement. These statements are based off of actual evidence/observation.
What are Normative Statements?
A statement that is based on the economist’s opinion or value judgement which cannot be proven.
What are some key words that show a statement is Positive?
What does Ceteris Paribus Mean?
Other things equal
What are the Factors of Production?
Land, Labour, Capital, Enterprise
