The Nature Of Economics

Question 1

Certeris Paribus

Answer 1

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

Question 2

Law

Answer 2

A theory or model which has been verified by empirical evidence

Question 3

Normative economics

Answer 3

The study and presentation of policy prescriptions involving value judgements about the way in which scarce resources are allocated

Question 4

Normative statement

Answer 4

A statement which cannot be supported or refuted because it is a value judgement

Question 5

Positive economics

Answer 5

The scientific or objective study of the allocation of resources

Question 6

Positive statement

Answer 6

A statement which can be supported or refuted by evidence

Question 7

Scientific method

Answer 7

A method which subjects theories or hypotheses to falsification by empirical evidence

Question 8

Social science

Answer 8

The study of societies and human behaviour using a variety of methods

Question 9

Theory or model

Answer 9

A hypothesis which is capable of refutation by empirical evidence

Question 10

Basic economic problem

Answer 10

Resources have to be allocated between competing uses because wants are infinite whilst resources are scarce

Question 11

Capital

Answer 11

As a factor of production is the stock of manufactured resources used in the production of goods and services

Question 12

Choice

Answer 12

Economics choices involve alternative uses of scarce resources

Question 13

Economic goods

Answer 13

Goods that are scarce because their use has an opportunity cost

Question 14

Entrepreneurs

Answer 14

Individuals who seek out profitable opportunities for production and taking risks in attempting to exploit these

Question 15

Factors of production

Answer 15

The inputs to the production process: land, labour, capital and enterprise

Question 16

Fixed capital

Answer 16

Economic resources such as factories and hospitals which are used to transform working capital into goods and services

Question 17

Free goods

Answer 17

Goods that are unlimited in supply and which therefore have no opportunity cost

Question 18

Human capital

Answer 18

The value of the productive potential of an individual or group or workers

Question 19

Labour

Answer 19

As a factor of production is the workforce

Question 20

Land

Answer 20

As a factor of production is all natural resources

Question 21

Needs

Answer 21

The minimum that is necessary for a person to survive as a human being

Question 22

Non renewable resources

Answer 22

Resources such a coal or oil which once exploited cannot be replaced

Question 23

Non sustainable resources

Answer 23

A resource which can be economically exploited in such as a way that it’s stock is being reduced over time

Question 24

Opportunity cost

Answer 24

The benefits forgone of the next best alternative

Question 25

Renewable resources

Answer 25

Resources such as fish stocks or forests that can be exploited over and over again because they have the potential to renew themselves

Question 26

Scarce resources

Answer 26

Resources that are limited in supply so that choices have to be made about their use

Question 27

Sustainable resources

Answer 27

Renewable resources that is being economically exploited in such a way that it will not diminish or run out

Question 28

Wants

Answer 28

Desires for the consumption of goods or services

Question 29

Working or circulating capital

Answer 29

Resources that are in a production system waiting to be transformed into goods or other materials before being finally sold to the consumer

Question 30

Capital goods

Answer 30

Goods that are used in the production of other goods

Question 31

Consumer goods

Answer 31

Goods or services that are used by people to satisfy their needs and wants

Question 32

Margin

Answer 32

A point of possible change

Question 33

PPF

Answer 33

A curve which shows the maximum potential output of one good given a level of output for all other goods in the economy