Economic Methodology and the Economic Problem - 1 Flashcards
what is a normative statement
a statement subject to opinions not based on facts
what is a positive economic statement
statements that can be tested against facts
what is capital
man made physical equipment used to make other goods
what is enterprise
entrepreneurs who take business risks
what is labour
people involved in the production
what is meant by free market
where supply and demand determine prices not governments
why might a country be operating within a ppf
recession so not all labour is being used
what causes outward shifts in ppf
technological improvements, discovery of new resources, increase in pop.
what causes inwards shifts in ppf
wars, disasters, prolonged recession where businesses close down.
what can a ppf be used to show
opportunity costs, economic growth
what Is productive efficiency?
where output is maximised with the available factors of production
what is allocative efficiency?
where good and services are used to maximise welfare
