Microeconomics- Economic methodology Flashcards
What is Utility
the usefulness or enjoyment a consumer can get from a service or good
What is a positive statement
A statement that can be empirically tested
What does Ceteris Paribus mean
All other things equal
What is a normative statement
Statements that express an opinion and a value judgement
What are needs
Anything that a human being requires for survival
What are wants
Something that is desired but not required for survival
What are the 4 factors of production?
Land (natural resources)
Labour (human resource)
Capital (goods used in the production of other goods)
Enterprise (when an entrepreneur brings the other factors of production together)
What is the meaning of a renewable resource
A resource that can be replenished over time
What is the meaning of a finite resource
A resource that is consumed at a faster rate than it is produced, causing it to eventually run out
What is the economic problem
That Humans have infinite wants but only a finite amount of resources
Scarcity meaning
When access to a good is limited
What is an opportunity cost
The cost of choosing one option over the second best option
What are Free Goods
Goods that can be produced without an opportunity cost
What is a free market economy
When governments do not intervene in the economy
What is a command economy
When all aspects of an economy are controlled by the government
