Definitions Flashcards
What is the definition of a positive statement?
A positive statement is an objective statement which can be proven or disproven by using a scientific approach and examining facts.
What is the definition of a normative statement?
A normative statement is a subjective statement which is a value judgement and cannot be proven or disproven by examining facts.
What is the definition of PPF?
Production Possibility Frontier is the maximum output combinations an economy can produce if all resources are fully and efficiently employed.
What is the definition of Opportunity Cost?
Opportunity Cost is the next best alternative foregone.
What is the definition of a merit good?
A merit good is one which people do not realise the true value of such as vaccination or education.
What is the definition of a demerit good?
A demerit good is one which people do not realise the true cost of such as drugs, cigarettes and alcohol.
What is the definition of a public good?
A public good is non excludable and non rival such as street lighting.
ie. You cannot prevent anyone from using it and they do not diminish as they are consumed.
What is the definition of market failure?
Market failure occurs when an unregulated market (no government intervention) does not achieve an efficient allocation of resources.
