Micro assessment week 1 Flashcards
What is ceteris paribus
all other factors are constant
What’s a social science
Studies human behaviour
What’s a positive statement
objective statement that can be tested with evidence
What’s a normative statement
subjective statement of opinion that have a value judgement
What’s the economic problem
Scarcity - limited resources but unlimited wants
What are the Factors of production
Land
Labour
Enterprise
Capital
What’s Land
natural resources
What’s Labour
human effort in production
What’s capital
man made resources to production
What’s enterprise
organisation of other FoPs
What’s opportunity cost
Next best alternative forgone when a choice is made
What do PPFs show
maximum output of an economy with current FoPs
What does it mean if a point is on the PPF
Efficient and Possible point of production
What does it mean if a point is under the PPF
Inefficient and Possible point of production
What does it mean if a point is above the PPF
Inefficient and Impossible point of production
What are the two types of economic growth
potential growth
actual growth
How is potential growth shown on a PPF
Whole PPF shift outwards
How is actual growth shown on a PPF
Single point shifting outwards
What is specialisation
When an economic agent focus on producing specific goods and services
Division of Labour
When production process is split into various tasks
Who created division of labour
Adam Smith
Advantages of div of labour
lower average costs
higher quality output
output increase
worker productivity increase
Disadvantages of div of labour
Workers become bored
Structural unemployment
What are the 4 functions of money
medium of exchange
store of value
unit of account
standard of deferred payment
