First cap

Question 1

Allocativley efficiency

Answer 1

Allocation of resources that maximizes consumer welfare(associated with a price equal to marginal cost)

Question 2

Basic economic problem

Answer 2

The problem of unlimited human wants and limited resources with competing resources making those resources scarce

Question 3

Physical capital

Answer 3

A man made aid to production such as tools machines vehicles buildings and infrastructure

Question 4

Ceteris paribus

Answer 4

All other things being equal-factors other than those states will not change

Question 5

Consumer durable goods

Answer 5

Tangible goods purchased by households that can be used more than once

Question 6

Consumer non-durable goods

Answer 6

Tangible goods purchased by households that cannot be used more than once

Question 7

Cost benefit principle

Answer 7

A rational agent will weigh the costs and benefits of a decision and only follow a course of action where the benefits are at least equal to the costs

Question 8

Division of labour

Answer 8

Breaking down a process into constituent parts and allowing workers to specialise on one or more of these parts to increase productivity

Question 9

Dynamic efficiency

Answer 9

Becoming more productively efficient over time usually as a result of investment

Question 10

Economics

Answer 10

Usually defined as the allocation of scarce resources

Question 11

Enterprise

Answer 11

Bringing together the other three factors of production to decide what to produce and how in doing so taking financial risk

Question 12

Equitable

Answer 12

Something is is deemed fair and requires a value judgement on the part of the observer. Equity should never be charged confused with equality

Question 13

Free market economy

Answer 13

Economic system resource allocation left to market forces

Question 14

Labour

Answer 14

The human input into the production process done by workers whether physical mental or manageral

Question 15

Land

Answer 15

Any natural resources found on in or under land

Question 16

Mixed economy

Answer 16

Economic system where resource allocation done partly by the government and partly by the interaction of market forces

Question 17

Normative statement

Answer 17

A statement based on a value judgement or opinion

Question 18

Opportunity cost

Answer 18

The benefit foregone from the next best alternative

Question 19

Pareto optimum

Answer 19

A situation where nobody made better off without somebody being made worse off

Question 20

Planned economy

Answer 20

Economic system in which government responsible for resource allocation rather than market forces

Question 21

Positive statement

Answer 21

An objective statement that is capable of being tested/verified

Question 22

Production

Answer 22

The conversion of factor inputs into outputs

Question 23

Production possibility frontier (ppfs)

Answer 23

A graphical representation of all the maximum cost combinations of two outputs that an economy can produce,given its initial factor endowment, current productivity and the current state of technology

Question 24

Productivity

Answer 24

The amount of output produced per unit of an input (such as labour)

Question 25

Productively efficiency

Answer 25

Producing at lowest possible average cost(requires technical efficiency)

Question 26

Rational utility maximiser

Answer 26

Someone who acts rationally to maximiser their own welfare

Question 27

Scarcity

Answer 27

This means that there is not enough of a resource to satisfy all of the competing demands for its use

Question 28

Services

Answer 28

Buying the time or skill of another- an intangible product

Question 29

Social science

Answer 29

Use of scientific methods to study social phenomena

Question 30

Specialisation

Answer 30

Focusing on one area of production

Question 31

Static efficiency

Answer 31

Being allocativley or productively efficient at a given moment in time

Question 32

Technical efficiency

Answer 32

Producing the .maximum possible amount of output from a given level of u puts( or producing a given level of output from the least possible inputs)

Question 33

Trade off

Answer 33

A situation where an improvement in one variable leads to a deterioration of another

Question 34

Utility

Answer 34

The benefit gained from the consumption of a good/service

Question 35

X inefficiency

Answer 35

The difference between technical efficiency and the performance of a firm that has little incentive to reduce unit costs in pursuit of profit, usually because they have a new price setting ability