Economic methodology and the economic problem - Definitions Flashcards
Positive Statement
A statement that can be tested and verified and is not based on value judgement
Normative Statement
A statement that is based on value judgement and cannot be tested and verified
Need
Something that is necessary for survival or cannot be lived without
Hypothesis
An idea or proposed explanation based on limited evidence that is texted through study and experimentation
Theory
An explanation or model based on observation, experimentation and reasoning having been tested and confirmed as general principle
Economics
the study of how most effectively to allocate scarce resources
Microeconomics
The study of individual economics agents and there decision making
Scarcity
Where there are unlimited wants but limited resources (the economics problem)
- where there are limited resources
Goods
Tangible products that can be touched and measured in exchange for money
Services
Intangible products that cannot be touched and measured and can be exchanged for money
Utility
The total satisfaction received from consuming a good or service
Want
Goods or services that we desire but are not necessary for survival
Renewable Resources
Natural resources of economic value that can be replaced or replenished at a rate equivalent to their rate of their consumption
Non-renewable Resources/ Finite Resources
Resources of economic value that cannot be readily replaced to that of their rate of consumption
Fundamental Economic Problem
There are unlimited wants and finite resources, how to allocate scarce resources to maximise human happiness, welfare and utility
