Economic Methodology Flashcards
What is the definition of economics?
The study of the way we allocate scarce resources to meet our infinite wants and the choices we make between competing uses
What are economic agents and what do they do?
Examples of economic agents are banks businesses and governments they make choices on resource allocation - designed to maximise utility
What are the three key economic decisions?
What to produce how to produce it who should benefit from it..
What resources are the factors of production
Land natural resources, labour human effort, capital fixed and working, enterprise
What is needed for the production of outputs
Combination of land, labour, capital and enterprise
What are goods and services
Goods are tangible physical objects. Services are intangible more like actions.
What are consumer and capital goods?
Consumer goods are goods purchased for final consumption. Capital goods are goods are used to produce other goods and services.
What are durable and non-durable goods?
Durable goods can be reused whereas non-durable goods are immediately consumed.
What are free goods?
Free goods are goods so plentiful no price can be charged for them.
What are the three sections of the economy?
The primary section. The secondary section. The tertiary section.
What is the change of production?
Stages through which a product passes before it’s produced and passed on to consumers.
What is opportunity cost?
The benefit lost from the next best alternative when making a decision.
What is the production possibility frontier?
The curve on a graph that shows the maximum output possibilities for two or more good given a set level of input and technologies.
Does a straight line PPF curve mean?
There is a constant opportunity cost.
What does a booed outward PPF curve mean?
There is an increasing opportunity cost, the more of one product you produce the faster you lose your other product.
