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Economics > Micro - Cycle 1 > Flashcards

Micro - Cycle 1 Flashcards

1
Q

Difference between social and natural science

A

Social
- human behaviour
- can’t control variables

Natural
- natural world
- can control variables

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2
Q

What are the assumptions economists use

A

consumers maximise utility
firms maximise profit
consumers and firms are rational

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3
Q

what is Ceteris Paribus

A

All other factors remain constant

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4
Q

what is a positive statement

A

objective statement that can be tested with evidence

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5
Q

what is a normative statement

A

has a value judgement and are
subjective statements of opinion

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6
Q

What is the economic problem

A

Scarcity

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7
Q

What is scarcity

A

limited resources but unlimited wants

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8
Q

What are the factors of production

A

Land
Labour
Capital
Enterprise

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9
Q

As a FoP what is land

A

natural resources

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10
Q

As a FoP what is labour

A

human effort in production

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11
Q

As a FoP what is capital

A

man made aid to production - tech

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12
Q

As a FoP what is enterprise

A

organise the other factors of production

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13
Q

What is opportunity cost

A

next best alternative forgone when a choice is made

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14
Q

Importance of Opportuntiy cost for consumers

A

make choices to purchase goods and services

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15
Q

Importance of Opportuntiy cost for firms

A

make choices to produce goods and services

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16
Q

what does PPF stand for

A

Production possibility frontier

17
Q

What does a PPF show

A

the maximum output of an economy with current FoP

18
Q

what type of growth is a ppf outward shift

A

potential growth

19
Q

what type of growth is a ppf point movement

A

actual growth (real GDP)

20
Q

what does it mean if the gradient is constant in ppf

A

constant opp cost
similar goods
FoP’s equally good at making goods

21
Q

what does it mean if the gradient is not constant on the ppf

A

not constant opp cost
goods are not similar
FoPs not equally good at making goods

22
Q

what production is happening of a point is outside the ppf graph

A

impossible point of production

23
Q

what production is happening of a point inside the ppf

A

inefficient point of production
not all FoP being used

Economics (5 decks)

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