Introductory Concepts Flashcards
Social Science
The study of societies and human behaviour using a variety of methods, including the scientific method.
Ceteris Paribus
All things being equal
Disposable income
The amount of money you have left to spend after you have pay your taxes and bills
Empirical
Based on scientific testing or practical experience, not on ideas
Good
A thing that is produced in order to be sold
Hypothesis
An idea that is suggested as an explanation for something, but that has not yet been proved to be true
Inequality
An unfair situation, in which some groups in society have more money, opportunities, or power than others
Law
A theory or model that has been verified by empirical evidence
Normative economics
The study and presentation of policy prescriptions involved value judgements about the way in which scare resources are allocated
Normative statements
Statements that cannot be supported or refuted because it is a value judgement
Positive economics
The study and presentation of policy prescriptions involving value judgement
Positive statements
Statements that can be refuted because it is a value judgement
Production possibility frontier
Shows how much an economy can produce given existing resources
Scientific method
A method that subjects theories or hypotheses to being disproved by empirical evidence
Theory or model
A hypothesis that is capable of being refuted by empirical evidence
Basic economic problem
Resources have to be allocated between completing uses because wants are infinite but resources are scare
Capital
As a factor of production is the stock of manufactured resources used in the production of goods and services
Choice
Economic choices involved the alternative uses of scare resources
Economic goods
Goods that are scare because their uses has an opportunity cost
Enterprise or entrepreneurship
As a factor of production is the seeking out of profitable opportunities for production and taking risks in attempting to exploit these
Entrepreneurs
Individuals who seek out profitable opportunities for production and take risks in attempting to exploit these
Factors of production
The inputs to the production process: land, labour, capital and enterprise or entrepreneurship
Fixed capital
Economics resources, such as factories and hospitals, that are used to transform working capital into goods and services
Free goods
Goods that are unlimited in supply and therefore have no opportunity cost
Human capital
The value of the productive potential of an individuals or group or workers; it is made up of the skills, talents, education and training of an individual or group and represents the value of future earnings and production
Labour
As a factor of production is the workforce
Land
As a factor of production is all natural resources
Needs
The minimum that is necessary for a person to survive as a human being
Non-renewable resources
Resources, such as coal or oil, which once exploited cannot be replaced
Non-sustainable resources
A resource which that can be economically exploited in such as a way that its stock is being reduced over time
Opportunity cost
The benefits of the next best alternative that are given up
Renewable resource
Resources, such as fish stocks or forests, that can be exploited over and over again because they have the potential to renew themselves
Scare resources
Resources that are limited in supply so that choices have to made about their use
Wants
Desire for the consumption of goods and services
Woking or circulating capital
Resources that are in production system waiting to be transformed into goods or other materials before being finally sold to the consumer
Allocative efficient
Allocative effiency occurs when social welfare is maximised. The distribution of resources is such that it is not possible to redistribute them without making something worse off
Capital goods
Goods that are used in the production of other goods, such as factories, offices, roads, machines and equipement
Consumer goods
Goods and services that are used by people to satisfy their needs and wants
Margin
A point of possible change`
Production possibility frontier
A curve that shows the maximum potential level of output of one good given a level of output for all others goods in the economy
Barter
Swapping one good for another without the use of money
Capital Productivity
Output per unit of capital employed
Division of lsbour
Specialisation by workers, who perform different tasks at different stages of production to make a good or service, in co-operation with other workers
