Nature of economics Flashcards
What is the basic economic problem?
Where there are infinite wants but finite resources thus economic agents have to make decisions about the allocation of resources for the best of society
Ceteris Paribus
the assumption that all things are equal/ same when one variable is being investigated
Command economy
Where resources (factors of production) are allocated by the government
Diminishing marginal utility
When the satisfaction gained from consuming an additional unit of a good is less than the previous unit
Division of labour
When the production process is divided into clear separate tasks with labour assigned to these tasks
Economic goods
scarce resources that carry an opportunity cost
Factors of production
Capital, Enterprise,Land and Labour - the resources required to create goods and services
Free Goods
Goods without any opportunity costs and aren’t scarce
Free Market
Market in which resources are allocated by the forces of supply and demand with no government intervention
Marginal Utility
additional satisfaction gained by a consumer by consuming another unit of good
Market
Where buyers and sellers meet to exchange goods and services
Normative statement
Value or personal judgement that cannot be tested as true or false
Positive statement
A statement that can be checked against facts or figures to be proved as true or false
Renewable/sustainable resources
Resources where stocks can replenish themselves
Specialisation
When a factor of production is focused on producing a specific good or service or one part of the production process
