Section 1 - Economic Methodology and the economic problem

Question 1

Positive statements

Answer 1

Logical arguments used to analyse economic issues

Question 2

Normative statements

Answer 2

Rested on judgement rather than on objective analysis

Question 3

The central purpose of economic activity

Answer 3

The satisfaction of needs and wants

Question 4

Economic resources

Answer 4

The factors of production that are used in the production process

Question 5

Economic goods

Answer 5

Scarce because they have an opportunity cost

Question 6

Free goods

Answer 6

No opportunity cost; unlimited in supply (air, sea water and sand)

Question 7

Economic problem

Answer 7

There is a scarcity of resources and there are infinite wants

Question 8

Opportunity cost

Answer 8

The benefit lost from the next best alternative when making a decision (the alternative forgone)

Question 9

PPE

Answer 9

A curve depicting the maximum an economy can produce given the resources

Question 10

An economy is always productively efficient if it…

Answer 10

can only produce more of one good by producing less of another