Intodruction To Econmoics Flashcards
What is a positive statement
A statement that is testable by data
What is a normative statement
A statement that is opinionated or concerned with someone’s judgement
What is opportunity cost
The benefit lost from the next best alternative
Example of consumer opportunity cost
The OC of a large chips is 3 chocolate bars
Example of producer opportunity cost
The opportunity cost to produce 3 jumpers is the same as a pair of shoes
Example of government opportunity cost
The opportunity cost to build 3 new schools is the same as running a hospital for a year
What is an economy
A system that works to solve the economic problem
What is the general economic problem
What is to be produced
How should it be produced
For whom is production taking place
What are the 4 main types of resources
Land
Labour
Capital
Enterprise
What are renewable resources
Is one that can be used repeatably and does not run out as it is naturally replaced
What are free goods
Goods that have no opportunity cost upon consumption/ production
What are economic goods
Goods and services that are scarce because using those resources means they cannot be used elsewhere
What is productive efficiency
Maximised output/ happiness
Allocative efficiency
Fully using resources but not in the most efficient way
What is economic growth
A rise in a countries productive capacity causes the PPF to shift outwards. This allows an increase in supply and goods
What are capital goods
Goods that are used to make consumer goods and services
E.g
What are consumer goods
Goods and services that satisfy costumer wants directly
What is an investment
Spending on capital goods
What causes outwards shift in PPF
More land - more area to produce consumer goods
Education - invention of new products
Machinery - more output ( faster)
High land production - increases output
Causes of inwards shifts of the nations PPF
Natural disaster
Civil war
Outwards labour migrations due to the drain of skilled workers
Decline in productivity of labourers
Production
Is a measure of the value of the outputs of goods and services
Productivity
A measure of the efficiency of factors of production.
Measure by output per person (hour)
What is the division of labour
The assignment of different parts of a manufacturing process or task to different people in order to improve efficiency
What is specialisation
The process of concentrating and becoming an expert in a particular field