Topic 1 - Economic Methodology Flashcards
Positive statement
Only with facts that can be tested and falsified.
Normative statement
Concerned with what people ought to do.
Value judgements
Whether something is desirable or not.
Economics definition
The science which studies human behaviour as the relationship between infinite needs and wants and search resources which have alternative uses.
Factors of Production
Capital
Enterprise
Land
Labour
Economic problem
Scarcity - lack of resources in an economy
Choice - Have to make a choice of what needs and wants will be fulfilled
Opportunity cost - Measures the cost of economic choice in terms of the next best alternative foregone.
Capital good
Machines, roads, factories or any tangible assets used to increase the productive potential of the economy.
Consumer good
Goods purchased only for the benefit for the consumer and not for the further use of productivity.
Economic welfare
The wellbeing of the consumer, in terms of meeting their needs.
PPF
Shows the variations in the amounts that can be produced from 2 goods and is also the point at which a country’s economy is most effectively producing its various goods and services.
Economic Growth
Increase in goods and services produced productively, over a certain period of time.
Full employment
This is when unemployment falls to 3% of the workforce.
Unemployment
The number of people out of work who are willing and able to work , but who can’t find a job. This can be measured by the Claimant Count or the Labour Force Survey.
Resource allocation
This is the assignment of tangible assets in order to improve the efficiency of goods and services.
Productive efficiency
Having maximum amounts of outputs, with the least amount of inputs in order to reduce costs and optimise profit.
