micro-definitions Flashcards
ceteris paribus
The assumption is that other things are being held equal or constant,so nothing else changes.
normative statement
statements including value judgements,that cannot be easily proved/disproved
positive statements
statements including facts,that can easily be proved/disproved.
value judgements
statements that are subjective and based on opinion rather than factual evidence.
want
something desirable,yet not necessarily for human survival
need
natural something for human survival ,e.g.food shelter.
renewable energy
restorable resource that can be replenished
scarcity
infinite wants and need,yet limited resources
Trade-offs
The PPF reflects the idea that an economy must make trade-offs when allocating its resources.Producing more of one good necessitates producing less of another
Allocative efficiency
When economic resources are utilised to produce the combination of goods and services that maximise economic welfare
allocative price function
Prices allocate resources away from markets with excess supply to markets with excess demand
factors of production
INputs of the production process,such as capital,enterprise,land and labour.
Fundamental economic problem
Deciding how to best allocate scarce resources to maximise overall economic welfare.
pareto efficiency
State of resource allocation,where in order to make an economic agent better off,another agent is made worse off.
Consumer surplus
Difference between the prices consumers are willing to pay and the prices they actually pay
