Economic methodology & The purpose of Economic Activity

Question 1

What is economics

Answer 1

economics is the study of how the world scarce resources are allocated to competing uses of society’s wants

Question 2

What is a positive economic statement

Answer 2

Objective statement which can be tested against facts to be declared true or false (don’t have to be true)

Question 3

What is a normative economic statement

Answer 3

a value judgement or a subjective opinion which cannot be declared true or false

Question 4

What is the difference between a positive economic statement and a normative economic statement?

Answer 4

-A positive statement contains an opinion & can be tested whilst a normative statement contains factual information & cannot be tested

Question 5

What is a need?

Answer 5

A need is something humans require to survive, such as food shelter & water

Question 6

What is a want?

Answer 6

A want is something not essential for survival but people might feel that it’ll improve their standard of living

Question 7

What is economic welfare?

Answer 7

the standard of living or general well-being of people in society

Question 8

What are the four factors of production?

Answer 8

-Capital
-Land
-Labour
-Enterprise

Question 9

What is Capital?

Answer 9

man-made physical equipment used to make other goods and services, E.G machinery and computer equipment

Question 10

What is Land?

Answer 10

All naturally occurring resources such as minerals, the sea, fertile land & the environment

Question 10

what is Enterprise?

Answer 10

Entrepreneurs are people who take a business risk in combining the other 3 factors of production in order to produce a good/service

Question 10

What is Labour?

Answer 10

people involved in production, also referred to as human capital