NATURE OF ECONOMICS Flashcards
Chapter 1
What is a normative statement
A statement that involves a value judgement based on your opinion or beliefs, rather than on facts.
What is the Basic Economic Problem
There is finite resources however infinite wants. Economics is about how to distribute these resources (economic goods)
Define Opportunity Cost
in decision making, by choosing one option you are inherently sacrificing/forgoing the next best option.
What is an economic good
A good that is scarce (opposite of a free good)
What are the three core economic agents
Consumers, Producers, Government
What are the four main factors of production
Labour, Capital, Enterprise, Land
What is Capital
Inputs such as plant and machinery, transport equipment and factory buildings
What is a renewable resource
A resource that can be replenished, such as forests that can be replanted
What does the PPF stand for
Production Possibility Frontier
What does the PPF show
The maximum combinations of goods or services that can be produced in a given period with available resources
What is a capital good
goods used as part of the production process, such as machinery or factory buildings
If a value is above the PPF on a graph it is…
impossible
If a value is below the PPF on a graph it indicates…
inefficiency
Define Division of Labour
a process whereby the production procedure is broken down into a sequence of stages, and workers are assigned to a particular stage.
What is a consumer good
A good for present use
