Theme 1 Micro economics definitions

Question 1

production

Answer 1

the transformation of factor inputs onto outputs (goods and services) by firms in order to earn profit

Question 2

consumption

Answer 2

the act of using goods and services to satisfy wants. this will normally involve purchasing goods and services

Question 3

land (factory of production)

Answer 3

the natural resources available for production

Question 4

labour (factor of production)

Answer 4

the Human Resources available for production

Question 5

capital (factor of production)

Answer 5

man made aids to production

Question 6

enterprise

Answer 6

organises resources - land, labour, capital in the production of goods and services

Question 7

renewable (energy) resource

Answer 7

(energy) resource that can be used without supply being diminished / a sustainable resource available for suture generations

Question 8

non-renewable (energy) resource

Answer 8

(energy) resource which diminishes the supply available / it is finite in supply and so non-sustainable for future generations

Question 9

good

Answer 9

tangible products (products that can be seen and touched)

Question 10

services

Answer 10

intangible products (products that cannot be seen or touched)

Question 11

needs

Answer 11

the minimum which is necessary to survive

Question 12

wants

Answer 12

anything you would like, irrespective of whether you have the resources to purchase it

Question 13

scarcity

Answer 13

a situation where there are insufficient resources to meet all wants

Question 14

choice

Answer 14

the selection of appropriate alternatives

Question 15

economic agent

Answer 15

household (consumer), firm (producer), government

Question 16

specialisation

Answer 16

the concentration of a worker, firm, region or country to produce a narrow range of goods and services

Question 17

division of labour

Answer 17

when specialisation has taken place where the production process is broken down into separate tabs

Question 18

barter economy

Answer 18

where goods and services are directly exchange for other goods and services without a medium of change

Question 19

positive statements

Answer 19

objective statements that can be tested, amended or rejected by referring to the available evidence. positive economics deals with objective explanation and the testing and rejection theories

Question 20

normative statements

Answer 20

a value judgement is a subjective statement of opinion rather than a fact that can be tested by looking at the available evidence
normative statements are subjective statements - i.e. they carry value judgements

Question 21

market

Answer 21

where Buyers and sellers meet to exchange goods and services