The Nature Of Economics Flashcards
Certeris Paribus
All things being equal; the assumption that whilst the effects of a change in one variable are being investigated, all other variables are kept constant
Law
A theory or model which has been verified by empirical evidence
Normative economics
The study and presentation of policy prescriptions involving value judgements about the way in which scarce resources are allocated
Normative statement
A statement which cannot be supported or refuted because it is a value judgement
Positive economics
The scientific or objective study of the allocation of resources
Positive statement
A statement which can be supported or refuted by evidence
Scientific method
A method which subjects theories or hypotheses to falsification by empirical evidence
Social science
The study of societies and human behaviour using a variety of methods
Theory or model
A hypothesis which is capable of refutation by empirical evidence
Basic economic problem
Resources have to be allocated between competing uses because wants are infinite whilst resources are scarce
Capital
As a factor of production is the stock of manufactured resources used in the production of goods and services
Choice
Economics choices involve alternative uses of scarce resources
Economic goods
Goods that are scarce because their use has an opportunity cost
Entrepreneurs
Individuals who seek out profitable opportunities for production and taking risks in attempting to exploit these
Factors of production
The inputs to the production process: land, labour, capital and enterprise
Fixed capital
Economic resources such as factories and hospitals which are used to transform working capital into goods and services
Free goods
Goods that are unlimited in supply and which therefore have no opportunity cost
Human capital
The value of the productive potential of an individual or group or workers
Labour
As a factor of production is the workforce
Land
As a factor of production is all natural resources
Needs
The minimum that is necessary for a person to survive as a human being
Non renewable resources
Resources such a coal or oil which once exploited cannot be replaced
Non sustainable resources
A resource which can be economically exploited in such as a way that it’s stock is being reduced over time
Opportunity cost
The benefits forgone of the next best alternative
