Defintions

Question 1

Allocative efficiency

Answer 1

Allocation of resources that maximises consumer welfare

Question 2

Basic economic problem

Answer 2

Problem of unlimited human wants and limited resources with competing uses

Question 3

Capital (physical)

Answer 3

A man-made aid to production such as tools machines , veichles buildings and infrastructure

Question 4

Ceteris paribus

Answer 4

“All other things being equal “ -factors other than those will not change

Basically means nothing else has changed

Question 5

Utility

Answer 5

The benefit gained from the consumption of a good or a service

Or

The benefit someone gains from something

Question 6

Positive statement

Answer 6

Statement of fact

Can be tested

Question 7

Normative statement

Answer 7

Contain value of judgement

Cannot be tested

Question 8

Opportunity cost

Answer 8

The benefit forgone from the next best alternative

The better decision!

Question 9

Rational utility maximiser

Answer 9

Someone who acts rationally to maximises there own welfare

Question 10

Pareti optimum

Answer 10

A situation in which nobody can be made better off without somebody being made worse off