Chapter 1

Question 1

What is a positive statement

Answer 1

Statement of fact that can be scientifically tested to see if it is correct or incorrect

Question 2

What is a normative statement

Answer 2

A statement that includes a value judgement and cannot be refuted just by looking at the evidence

Question 3

What is a need

Answer 3

Something that is necessary for human survival, such as food, clothing, warm or shelter

Question 4

What is a want

Answer 4

Something that is desirable such as fashionable clothing but it is not necessary for human survival

Question 5

What is economic welfare

Answer 5

The economic well being of an individual a group within society or an economy

Question 6

What is an economic system

Answer 6

The set of institutions within which a community decides what,how and for whom to produce

Question 7

What is a market economy

Answer 7

An economy in which goods and services are purchased through the price mechanism in a system of markets

Question 8

What’s a command economy

Answer 8

An economy in which government officials or planners allocate economic resources to firms and other productive enterprises

Question 9

What is a mixed economy

Answer 9

An economy that contains both a large market sector and a large non-market sector in which the planning mechanism operates

Question 10

What’s production

Answer 10

Converts inputs or factor services into outputs of goods and services

Question 11

What is a capital good

Answer 11

A good which is used in the production of other goods or services

Question 12

What is a consumer good

Answer 12

A good which is consumed by individuals or households to satisfy their needs or wants.

Question 13

What are the factors of production.

Answer 13

Inputs into the production process, such as land, labour, capital and enterprise

Question 14

What is a renewable resource

Answer 14

A resource, such as timber that with careful management can be renewed as it is used

Question 15

What are non renewable resources

Answer 15

A resource such as oil which is scarce and runs out as it is used.

Question 16

What is a choice

Answer 16

Choosing between alternatives when making a decision on how to use scarce resources

Question 17

What is an opportunity cost

Answer 17

The cost of giving up the next best alternative

Question 18

What is a production possibility frontier

Answer 18

A curve depicting the various combinations of two products that can be produced when all the available resources are fully and efficiently employed

Question 19

What is technical progress

Answer 19

New and better ways of making goods and new techniques for producing more output from scarce resources

Question 20

What is economic growth

Answer 20

The increase in the potential level of real output the economy can produce over a period of time

Question 21

What is full employment

Answer 21

When all who are able and willing to work are employed

Question 22

what is unemployment?

Answer 22

When not all of those who are able and willing to work are employed

Question 23

What is the resource allocation

Answer 23

The process through which the available factors of production are assigned to produce different goods and services

Question 24

What is productive efficiency

Answer 24

For the economy as a whole occurs when it is impossible to produce more of one good without producing a less of another. For a firm it occurs when the average total cost of production is minimised

Question 25

Environmental resources comprise all the natural resources that are used or can used in the economic system. These are :

Answer 25

Physical resources such as soil, water, forests
Gases such as hydrogen and oxygen
Abstract resources such as solar energetic, wind energy, the beauty of the landscape, good air and clean water

Question 26

Productive Efficiency is often associated with

Answer 26

Unemployment