Scarcity & Choice Flashcards
The basic economic problem
There are unlimited wants but finite resources, therefore a choice needs to be made as to the allocation of resources.
Factors of production
Land, Labour, Capital, Enterprise
Opportunity cost
The cost expressed in terms of the next best alternative sacrificed.
Supply
The quantity of a product the producers are willing and able to provide at different market prices.
Demand
The quantity of a product that consumers are willing and able to purchase at various prices.
Free Market Economy
No government involvement in economic decisions. Consumers decide what should be produced through the purchases they make.
Command Economy
An economic system in which most resources are state owned and also allocated centrally.
Mixed Economy
An economic system in which resources are allocated through a mixture of the market and public sector involvement.
Specialisation
The concentration by a worker, firm, region or whole economy on a narrow range of goods & services.
Exchange
The process by which goods & services are traded.
Division Of Labour
The specialisation of labour where the production process is broken down into separate tasks.
Productivity
Output, or production of a good/service , per worker.
Positive Statements
Objective statements that can be tested by referring to the available evidence.
Normative Statements
Subjective statements which contain a value judgement.
Economic agents
Producers, consumers, governments
