Micro 1.1 Flashcards
What is the basic economic problem?
The problem of wants and needs exceeding resources
What is scarcity?
A lack of resources
What is the opportunity cost?
The next best alternative forgone
What are the factors of production
Land, labour, capital and enterprise
What does a PPF show?
The alternative combinations of two goods or services attainable when all resources are fully and efficiently used
What is a positive statement?
A statement which can be tested
What is a normative statement?
A statement which expresses a judgement
What is the opportunity cost calculation?
Amount of good given up / amount of good gained
What is land as a factor of production?
All natural resources on the planet
What is labour as a factor of production?
The human input
What is capital as a factor of production?
Manmade physical goods
What is enterprise as a factor of production?
The initial idea and organisation of the other 3 factors
What is the free market?
A market running without government intervention
