Theme 1

Question 1

Definition of renewable resources

Answer 1

resources that are replenished at a rate that is equal to or greater than the rate at which they are depleted. if the rate at which resources are depleted is greater than they are replenished then they are non-renewable.

Question 2

Definition of factors of production

Answer 2

• land (natural resources)
• labour (the physical and mental contribution of human workforce)
• capital (the equipment, infrastructure and institutions that enable us to produce goods and services that we consume)
• entrepreneurship (the organising of the other factors of production to produce the goods and services that we would like to consume)

Question 3

Definition of opportunity cost

Answer 3

the cost of the next best alternative that has been foregone (to make/do that thing) - providing it’s a rational decision

Question 4

Definition of positive statements

Answer 4

statements that are based on facts and can be tested as true or false

Question 5

Definition of normative statements

Answer 5

statements that are based on value judgements and so cannot be tested as true or false

Question 6

Definition of ceteris paribus

Answer 6

holding all other variables constant (besides the variable under consideration)

Question 7

Definition of marginal analysis

Answer 7

a technique to understand the impact of changes in variables by looking at the impact of a small change in the independent variable on the dependent variable

Question 8

Definition of PPF

Answer 8

it shows the maximum output combinations an economic agent or an entire economy can achieve with all resources fully employed