Section 1: The Economic Problem Flashcards
1
Q
What is a positive statement?
A
They are objective statements that can be tested by referring to the available evidence.
2
Q
What is a normative statement?
A
They are subjective statements which contain a value judgement (opinion). Can’t be refuted just by looking at data/evidence.
3
Q
Why are positive statements important?
A
They can be tested to see whether economic ideas are correct.
4
Q
Why are normative statements important?
A
Value judgements influence decision making and government policy.
5
Q
What are the main economic agencies?
A
Producers, consumers, governments.
6
Q
What is the law of diminishing marginal utility?
A
The proposition that as more of a product is consumed, the additional satisfaction gained
from each extra unit declines.
