Economic methodology and the economic problem

Question 1

Differences between economics and other social sciences

Answer 1

economics studies the economic behaviour of groups and individuals as well as economic relationships

Question 2

what is a positive statement

Answer 2

statement based off fact and can be proved with evidence

Question 3

what is a normative statement

Answer 3

cannot be scientifically tested , personal judgement

Question 4

value judgment

Answer 4

whether a something is desirable or not

Question 5

purpose of economic activity

Answer 5

the production of goods and services to satisfy wants and needs

Question 6

renewable resources

Answer 6

reproducible and with careful management can be renewed, e.g: wood and animals

Question 6

what is a need

Answer 6

something people cannot live without, a necessity e.g: food and water

Question 6

what is a want

Answer 6

something people would like to have e.g: a car or the latest gadgets

Question 6

what is economic welfare

Answer 6

the economic well-being of an individual within an economy (human happiness)

Question 6

factors of production

Answer 6

land - land
labour - workers
capital - machinery
enterprise - risktakers

Question 7

basic economic problem

Answer 7

limited resources but unlimited wants

Question 7

key economic questions (3)

Answer 7

what to produce?
who to produce for?
how to produce?

Question 7

types of environmental scarce resources (physical, gas, abstract)

Answer 7

physical resources - soil, forest
gasses - hydrogen, oxygen
abstract - solar energy, clean water

Question 7

mixed economy

Answer 7

contains both a large market-owned sectors and state owned sectors

Question 7

command economy

Answer 7

economy which government officials allocate resources,/control firms and other enterprises

Question 8

non-renewable resources

Answer 8

finite and cannot return once used e.g: oil

Question 9

opportunity cost

Answer 9

the cost of giving up the next best alternative

Question 10

rational behaviour

Answer 10

people make decisions in their self-interest or to maximise their private benefit

Question 11

what does a PPF diagram look like

Answer 11

X axis = good X
Y axis = good Y
quater circle ppf curve

Question 12

Macro : how to show short run growth on the PPF diagram

Answer 12

shift from a point inside the curve to on the curve

Question 13

macro : how to show long run growth on the PPF diagram

Answer 13

a movement of the curve outward

Question 14

what is a movement along the PPF curve

Answer 14

contraction or extension of goods on the PPF show the relationship between 2 goods

Question 15

where on a PPF is efficient and what type of efficiency is it

Answer 15

point on the curve are productively efficient

Question 16

what is the opportunity cost on a PPF

Answer 16

the all of one good when the production of another increases