Glossary

Question 1

Economics

Answer 1

A social science that studies human society and social relationships rather than a a natural science

Question 2

Ceteris paribus

Answer 2

Latin for ‘all things being equal’

Question 3

Rationality

Answer 3

Rational people will process all the information about each economic decision and choose the option that maximises utility(satisfaction)

Question 4

Positive statement

Answer 4

A statement which can be supported or refuted by evidence

Question 5

Normative statement

Answer 5

A statement which cannot be supported by evidence as it is a value judgement

Question 6

Value judgement

Answer 6

An assessment of something as good or bad based on ones own standards and priorities

Question 7

Land

Answer 7

The stock of raw materials

Question 8

Sustainable resources

Answer 8

Renewable resources that are being used economically such that they wont diminish or run out

Question 9

Non-sustainable resources

Answer 9

Renewable resources that are diminishing over time due to economic exploitation

Question 10

Labour

Answer 10

The workforce of an economy

Question 11

Human capital

Answer 11

The value to the economy that each worker brings with their unique set of characteristics

Question 12

Capital

Answer 12

The manufactured stock of resources used in the production of goods and services

Question 13

Working capital

Answer 13

The stock of raw materials, semi-manufactured and finished goods waiting in the production process to be sold to the consumer (resources that create the final product)

Question 14

Fixed capital

Answer 14

The stock of materials that will not be transformed into the final product, but are used to transform working capital into finished products

Question 15

Enterprise

Answer 15

The seeking of profitable opportunities for production

Question 16

Rewards of the factor of production

Answer 16

The payments that the owners of the factors of production recieve for their use

Question 17

Needs

Answer 17

The minimum that is necessary for a person to survive as a human being. People have finite needs.

Question 18

Wants

Answer 18

Our desires of goods and services, wants are unlimited as we always want more of something

Question 19

Scarcity

Answer 19

When demand for a good is higher than its supply and arises in all economies as wants are infinite and resources are finite

Question 20

Basic economic problem

Answer 20

The need to allocate scarce resources between competing uses

Question 21

Opportunity cost

Answer 21

The benefit lost from foregoing the next best option

Question 22

Economy

Answer 22

A system which solves the basic economic problem by making three key economic decisions about how to use scarce resources to satisfy competing wants and needs

Question 23

Economic agents

Answer 23

People that make the key choices within an economy

Question 24

Households (economic agents)

Answer 24

Decide how much they will work and what to spend their earnings on

Question 25

Firms (economic agents)

Answer 25

Make decisions based about the production of goods and services

Question 26

Governments (economic agents)

Answer 26

Make the decisions about taxation governments spending and regulations