Nature Of Economics

Question 1

Positive statement

Answer 1

A statement that can be tested using evidence to see if it’s true or false

Question 2

Normative statement

Answer 2

A statement that involves a value judgement

Question 3

Value judgement

Answer 3

An evaluative statement of how good or bad you think an idea or action is

Question 4

The economic problem/problem of scarcity

Answer 4

We have infinite wants but scarce resources

Question 5

Opportunity cost

Answer 5

The benefit given up of the next best alternative

Question 6

Economy

Answer 6

Any system that tries to solve the economic problem, or the problem of scarcity

Question 7

What are the factors of production

Answer 7

Land, labour, capital, enterprise

Question 8

production possibility frontier (PPF)

Answer 8

a diagram that shows the maximum possible output combinations of two goods in an economy, assuming full and efficient employment of resources

Question 9

productive efficiency

Answer 9

When maximum output is produced from the available factors of production and when it is not possible to produce more of the one good or service without producing less of another

Question 10

Allocative efficiency

Answer 10

when an economy factors of production are used to produce the combination of goods and services that maximises society welfare

Question 11

consumer goods

Answer 11

goods we consume

Question 12

capital goods

Answer 12

goods used to produce consumer goods