Theme 1 Micro economics definitions Flashcards
production
the transformation of factor inputs onto outputs (goods and services) by firms in order to earn profit
consumption
the act of using goods and services to satisfy wants. this will normally involve purchasing goods and services
land (factory of production)
the natural resources available for production
labour (factor of production)
the Human Resources available for production
capital (factor of production)
man made aids to production
enterprise
organises resources - land, labour, capital in the production of goods and services
renewable (energy) resource
(energy) resource that can be used without supply being diminished / a sustainable resource available for suture generations
non-renewable (energy) resource
(energy) resource which diminishes the supply available / it is finite in supply and so non-sustainable for future generations
good
tangible products (products that can be seen and touched)
services
intangible products (products that cannot be seen or touched)
needs
the minimum which is necessary to survive
wants
anything you would like, irrespective of whether you have the resources to purchase it
scarcity
a situation where there are insufficient resources to meet all wants
choice
the selection of appropriate alternatives
economic agent
household (consumer), firm (producer), government
specialisation
the concentration of a worker, firm, region or country to produce a narrow range of goods and services
division of labour
when specialisation has taken place where the production process is broken down into separate tabs
barter economy
where goods and services are directly exchange for other goods and services without a medium of change
positive statements
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
normative statements
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
market
where Buyers and sellers meet to exchange goods and services
