econ micro 1

Question 1

allocative efficiency

Answer 1

when economic resources are utilised to produce the combination of goods and services that maximise economic welfare

Question 2

capital/producer goods

Answer 2

goods used in the production of other goods

Question 3

consumer good

Answer 3

goods consumed by households and individuals, used to satisfy wants and needs

Question 4

economic welfare

Answer 4

the economic satisfaction of individuals/households in an economy

Question 5

factors of production

Answer 5

inputs of the production process which are capital, enterprise, land and labor

Question 6

finite resource

Answer 6

non renewable resource that becomes increasingly scarce

Question 7

fundamental economic problem

Answer 7

deciding how to best allocate scarce resources to maximise overall economic welfare

Question 8

normative statement

Answer 8

statements including value judgements, that cannot be easily proved or disproved

Question 9

opportunity cost

Answer 9

the next best alternative that has to be forgone in order to make a decision

Question 10

positive statement

Answer 10

statements including facts, that can easily be proved or disproved

Question 11

production possibility frontier

Answer 11

a curve displaying the various possible combinations of 2 products that can be produced with finite resources

Question 12

scarcity

Answer 12

resulting from the concept of infinite wants and needs yet limited resources