theme 1 Flashcards
what type of science is economics
economics is a soft science
what is a positive statement
an objective statement that can be proved or disproved
what is a normative statement
a statement that is judgement based and cannot be proved or disproved
what does ceteris paribus mean
all other things remain equal
what is an economic model
a simplified version of reality that allows us to observe, understand and make predictions about economic behaviour.
what is a factor of production
the inputs available to supply goods and services in an economy
what are the factor inputs in an economy
Capital
Enterprise
Land
Labour
what is Capital
when goods are used in the supply of other products
what is Enterprise
when entrepreneurs organise factors of production and take risks
what is Land
when natural resources are available for production
what is Labour
the human input into the production process
what is factor reward
describe the incomes that flow to each of the main factors of production when they are brought into productive use
what are the four factor rewards
C - interest
E - profits
L - rent
L - wages
what is Opportunity cost
it measures the cost of choices made due to scarcity. it describes trade-offs in the presence of scarcity. By satisfying one objective more it means achieving other objectives less
how can a fame influence us
it influences our decisions and behaviours
