MICRO DEFINITIONS YEAR 1 Flashcards
Economics
The allocation of scare resources to provide for unlimited human wants.
Positive Statement
Based on facts which can be tested as true or false and are value-free
Normative Statement
Based on value judgements which cannot be tested as true or false
Scarcity
The idea that there are finite resources compared to infinite human wants, so choices have to be made about how to use those resources.
Opportunity Cost
The value of the next best alternative that has to be given up in decision making.
Renewable resource
A resource whose stock level can be replenished naturally over a period of time.
Non-renewable resource
A resource whose stock level decreases over time as it is consumed.
Consumer good
A good, such as a chocolate bar, that directly provides utility to consumers. It is wanted for the satisfaction it gives.
Capital good
A good that is used to produce consumer goods or services, such as a machine that helps make chocolate bars. It is not wanted for its own sake, but rather for the consumer goods and services it can produce.
Production Possibility Frontier
The maximum potential output of a combination of goods an economy can achieve when all its resources are fully and efficiently employed, given the current level of technology.
Specialisation
When an individual, firm, region, or country concentrates on the production of a limited range of goods and services.
Division of labour
A process whereby the production procedure is broken down into stages, & each worker assigned a particular stage
Money
Anything that is generally acceptable in the payment of a good or service, or of a debt.
Marginal Analysis
An approach to economic decision making that is based on considering the marginal (additional) benefits & costs of a change in behaviour.
Model
A simplified version of reality used to provide insight into economic decisions and events.
