Economic Methodology And The Economic Problem Flashcards
Economics
A science studying human behaviour as a relationship between ends and scarce means which have alternative uses.
4 needs
Water
Food
Shelter
Health care
3 wants
Car
computer
Phone
What are resources known as
Factors of production and they are resources employed to produce goods or services
Opportunity cost
Value of the next best alternative foregone
What does a production possibility curve show on a diagram
Maximum possible outputof the 2 goods that can be produced by the firms with a given set of resources in a given period of time
2 ways a PPC shifts outwards
- Increase in resources ( land, labour, capital, enterprise)
- Improved technology
2 ways the PPC shifts inwards
- Decrease in resources
2. Decrease in technology
Capital goods
Goods used to produce other goods
Consumer goods
Goods used to satisfy wants directly
3 quantity factors
New land
New labour
New capital
2 quality factors
Improved technology
Improved human capital
Specialisation
A limited range of goods are produced by an individual factors of production or firms or country
Division of labour
Breaking down of the production process into a sequence of tasks with workers assigned to particular tasks
