Economic Methodology & Resources y12

Question 1

What is Economics?

Answer 1

Studies how scarce resources are allocated, social science and it has ‘soft theories’.

Question 2

What is a positive statement?

Answer 2

Objective, can be proven, not always true.

Question 3

What is a normative statement?

Answer 3

Subjective, can’t be tested against facts.

Question 4

“Ceteris paribus”

Answer 4

‘When all other factors remain constant’.

Question 5

Opportunity cost

Answer 5

Is the cost of giving up the NEXT best option.

Question 6

Market economy

Answer 6

Lead by the market, private buyers and sellers (capitalism).

Question 7

Planned economy

Answer 7

Government determined (old communist countries)

Question 8

Mixed economy

Answer 8

Mostly lead by market but the government can overrule decisions.

Question 9

Value judgements

Answer 9

Are subjective moral beliefs about what is right or wrong.

Question 10

Economic resources

Answer 10

The production of goods and services

Question 11

CELL

Answer 11

Capital, Enterprise, Land, Labour

Question 12

Capital

Answer 12

e.g lorries, factories. Interest payment.

Question 13

Enterprise

Answer 13

e.g the entrepreneurs. Profit.

Question 14

Land

Answer 14

Naturally occurring resources. Rent.

Question 15

Labour

Answer 15

Human capital. Wage.

Question 16

Capital goods

Answer 16

A product used to make other goods & services.

Question 17

Consumer goods

Answer 17

Used by individuals to satisfy their own needs & wants.

Question 18

3 fundamental economic questions:

Answer 18

What to produce? How to produce?
Who to produce for?

Question 19

Economic problem

Answer 19

Resources are scarce and finite relative to society’s needs and wants.