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Economics Micro > Economic Methodlogy And The Economic Problem > Flashcards

Economic Methodlogy And The Economic Problem Flashcards

1
Q

What is microeconomics?

A

The study of economics at the level of the individual firm, industry or consumer/household

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2
Q

What are positive statements?

A

Objective statements that can be tested, amended or rejected by referring to available evidence

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3
Q

What are normative statements?

A

They are subjective statements

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4
Q

What is opportunity cost?

A

Measures the cost of a choice made in terms of the next best alternative foregone or sacrificed

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5
Q

What is an example of opportunity cost?

A

The opportunity cost of deciding not to work an extra ten hours a week is the lost wages given up

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6
Q

What are the factors of production?

A
  • Land
  • Labour
  • Enterprise
  • Capital
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7
Q

What are capital goods?

A

Goods that are used to make consumer goods and services

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8
Q

What are consumer goods and services?

A

Goods and services which satisfy our needs and wants directly

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9
Q

What are consumer durables?

A

Products that provide a steady flow of satisfaction/ utility over their working life

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10
Q

What are Consumer non-durables?

A

Products that are used up in the act of consumption

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11
Q

What are Consumer services?

A

Things such as a hair cut or a ticket to a show

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12
Q

What are non-renewable resources?

A

Finite in supply

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13
Q

What are renewable resources?

A

Resources that are replaceable over time eg. Solar energy, oxygen

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14
Q

What are free markets?

A
  • Markets allocate resources
  • Driven by the profit motive
  • Limited role for state
  • Private sector dominates
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15
Q

What is a mixed economy?

A
  • mix of state and private ownership
  • government intervention in markets
  • mix will vary from country to country
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16
Q

What is a command economy?

A
  • Most resources are state owned
  • Planning allocates resources
  • Little role for market prices
17
Q

What are the advantages of a free market?

A
  • Resources tend to go where the market return is highest
  • Competition drives innovation and invention in markets
  • Competition in the form of international trade in goods and services helps to reduce domestic monopoly power and increases choice
18
Q

What is allocative efficiency?

A

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

19
Q

What is allocative price function?

A

Prices allocate resources away from markets with excess supply to markets with excess demand

20
Q

What are produced goods?

A

Goods used in the production of other goods

21
Q

What are consumer goods?

A

Goods consumed by households and individuals used to satisfy needs and wants

22
Q

What is economic welfare?

A

The economic satisfaction of individuals in an economy

23
Q

What is enterprise?

A

The ability to utilise factors of production effectively

24
Q

What are factors of production?

A

Inputs of the production process such as land labour capital and enterprise

25
Q

What are finite resources?

A

Non renewable resource that becomes increasingly scarce

26
Q

What is the Fundamental economic problem?

A

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

27
Q

What is imperfect information?

A

When individuals lack the information to make the best decisions

28
Q

What is incentive price function?

A

Prices create incentives for people to adjust their economic transactions

29
Q

What is an infrastructure?

A

Facilities required for an economy to function

30
Q

What is Pareto efficiency?

A

State of resource allocation where in order to make an economic agent better off another agent is made worse off

31
Q

What is the production possibility frontier?

A

A curve displaying the various possible combinations of two produced with finite resources

32
Q

What is rationing price function?

A

Prices rise to ration demand for goods

33
Q

Whag is

A
34
Q

What is scarcity?

A

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

35
Q

What is signalling price function?

A

Prices provide information to sellers and buyers influencing economic decisions

Economics Micro (8 decks)

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