Theme 1 Flashcards
What are positive and normative statements
Postive-Objective fact-how things are
Normative-Subjective -how things should be
Ceterus Paribus?
All else being equal
What is an economic good
Something that faces scarcity
What is opportunity cost
The value of the next best alternative foregone when making a decision
What is marginal analysis
Approach to decision making based on additional benefits and costs of a change in behaviour
What the main factors of production
Capital
Entrepreneurs/Enterprise
Land
Labour
`What is the definition of sustainable growth
Meeting the needs of today without compromising the ability of future generations to meet their needs-Brundtland Commision 1987
What 3 economic questions did paul samuelson identify in the 70s
What should be Produced
How should it be produced
For whom should it be produced
Advantages and disadvantages of specialisation
Benefits-More efficient e.g. fords production line. More cost effective training. Productivity and total output increase
Costs-Boring. Overspecialisation leads to inflexibility e.g. if one worker is ill it grinds to a halt
What is a market
A set of arrangements that alllow transactions to take place
What is the issue with a barter economy
If you need bananas and have leather, you need to find someone who has leather and wants bananas-a double coincidence of wants-inefficient
What are the 4 functions of money
Medium of exchange
Store of Value
Measure of Value
Method of deferred payment
What is diminishing marginal utility
Individual gains less utility from each subsequent consumption
