The Nature Of Economics Flashcards
What is Specialisation and the Division of Labour?
Specialisation occurs when a firm, instead of manufacturing a variety of products, create a limited range, and allow other firms to offer Goods and Services. Division of labour is a method of improving productivity, by making a labour force split a complex set production tasks into simple, repetitive tasks.
What is Choice and Opportunity cost?
Choice refers to the basic economic decisions an individual or firm has to make given that they cannot have everything they desire. Opportunity cost refers to the price of the next foregone opportunity.
What’s the difference between Positive and Normative economics?
Positive Economics is the portion of economics that contains facts, and can be proven. Normative Economics reference what should be, and contains value judgements.
What is the Basic Economic Problem?
There are limited resources, but humans have an infinite number of desires. Economics must decide how to distribute these scarce resources, and to who.
What are Production Possibility Frontiers?
A Production Possibility Frontier (PPF) Curve is a graph that represents the opportunity cost between manufacturing two goods in an economy. A point behind the line represents a waste of scarce resources, a point on the line represents maximum efficiency. An expansion in the curve represents economic growth in the economy.
