Economy Methadology Flashcards
What is a positive statement?
An objective statement that can be tested against the facts to be declared either true or false.
What is a normative statement?
A subjective opinion, or value judgement that cannot be declared either true or false.
What is need?
Something which humans need to survive (food water shelter).
What is want?
Something which people feel improves their standard of living but is not required for survival.
What’s Economic Welfare?
The standard of living or general well-being of people in society.
What’s Factors of Production?
A country’s productive economic resources, divided into capital, enterprise, land and labour.
What is capital?
Man made physical equipment used to make other goods and services. This include machinery and computer equipment
What is Enterprise?
Entrepreneurs are individuals who take a business risk in combining the other three factors of production in order to produce a good or service.
What is land?
All naturally occurring resources such as minerals, the sea, fertile land, and the environment. These can be divided into renewable and non-renewable resources .
What is the Basic Economic Problem?
Scarce economic resources compared with society’s unlimited wants.
What is the opportunity cost?
The cost of the next best alternative that you give up when you have to make a choice.
What is Economics Goods?
A good that has an opportunity cost in consumption because it uses up scarce resources.
What is a Free Good?
A good that does not have an opportunity cost in consumption because it doesn’t use up scarce resources.
What is the Production Possibility Curve?
A diagram which shows the maximum possible output combinations of two goods in an economy, assuming full employment of efficient resources.
What is an economic growth?
An increase in the productive capacity of an economy over time.
What is Labour?
People involved in productions, sometimes referred to as human capital.
What are the three fundamental questions that must be considered?
1) What to produce and in what quantities?
2) How should goods and services be produced?
3) To whom should goods and services be allocated?
What are the factors causing an outward shift of the ppc? (INCREASE)
- Technological Improvement . (Productivity increase for capital)
- Discovery of new resources.
- Improvement in education and training that lead to more productive workforce.
- Changes that lead to an increase in working population.
What are the factors causing an inward shift of the ppc? (DECREASE)
- Disasters
- Wars
- Global Warming
- Prolonged Recessions
What is productive efficiency?
When maximum output is produced from the available factors of production and when it is not possible to produce more of one good or service without producing less of another.
What is Allocative Efficiency?
When an economy’s factors of production are used to produce the contamination of goods and services that maximises society’s welfare.
