Economics theme 1 Flashcards
Why is economics considered a social science?
- connected with the study of human behavior
-investigates how scarce resources (CELL) are provided for unlimited human wants
What is ceteris paribus?
“everything remains equal”
What is a normative statement?
A subjective statement which is formed based on opinions. (often include words ought, should, unfair, better, worse ext…)
What is a normative statement based on?
-Value judgments
-They cant be tested
What is a positive statement?
These statements come from facts that can be tested. ( can be true or false)
What is the economics problem?
-There are limited (finite) resources available for unlimited needs and wants in society (infinite)
-Creates a problem of scarcity, it means that choices always have to be made regarding how to use the scarce resources appropriately to meet those unlimited wants.
What are the FOUR factors of production? (CELL)
-Capital
-Labour
-Land
-Entrepreneurship/enterprise
What is labour?
Human resources and skills
What is capital?
Anything that is used to produce other goods (e.g money, machines and buildings)
What is Entrepreneurship / enterprise
Ideas and skills
What is economic activity?
It is the process of trying to match needs and wants with supply (demands and supply)
What three questions does the economic problem ask?
1) WHAT to produce ?
2) HOW to produce ?
3) WHO to produce for ?
What is opportunity cost?
The benefit lost/forgone of the next best alternative when making a choice
What is economic welfare?
The satisfaction / benefits gained from an economic activity (meeting our needs)
What is trade off?
What we pick in the midst of many alternatives
