TOPIC 1 - NATURE OF ECONOMICS AND MARKETS Flashcards
WHAT DOES CETERIS PARIBUS MEAN?
ALL OTHER THINGS BEING EQUAL.
WHAT ARE POSITIVE STATEMENTS?
POSITIVE STATEMENTS ARE OBJECTIVE AND CAN BE TESTED IN EXPERIMENTS.
WHAT ARE NORMATIVE STATEMENTS?
NORMATIVE STATEMENTS ARE SUBJECTIVE AND CANNOT BE PROVEN OR DISPROVEN.
ETHICAL VALUE BASED JUDGEMENTS.
WHAT IS THE ECONOMIC PROBLEM AND HOW CAN IT BE SOLVED?
THE QUESTION OF HOW SCARCE RESOURCES CAN BE ALLOCATED TO SATISFY UNLIMITED WANTS.
CAN BE SOLVED BY QUEUING AND THE ABILITY TO PAY
WHAT ARE THE FACTORS OF PRODUCTION?
CAPITAL
ENTERPRISE
LAND
LABOUR
WHAT IS CAPITAL?
GOODS USED TO PRODUCE CONSUMER GOODS.
WHAT IS ENTERPRISE?
PEOPLE THAT INVEST, INNOVATE AND ORGANISE OTHER FACTORS OF PRODUCTION.
WHAT IS LAND?
NATURAL RESOURCES.
WHAT IS LABOUR?
HUMAN INPUT INTO PRODUCTION PROCESS.
WHAT IS AN OPPORTUNITY COST?
THE COST OF GIVING UP THE NEXT BEST ALTERNATIVE BY MAKING A CHOICE.
WHAT IS A FREE GOOD?
RESOURCES WITH NO OPPORTUNITY COST
WHAT IS AN EXAMPLE OF A FREE GOOD?
BREATHING AIR
WHAT IS A RENEWABLE RESOURCE?
RESOURCES WITH STOCK LEVEL THAT IS NATURALLY REPLENISHED E.G WOOD
WHAT IS A NON RENEWABLE RESOURCE?
RESOURCES WITH STOCK LEVEL THAT DECREASES OVER TIME AS IT IS CONSUMED E.G FOSSIL FUELS.
WHY IS PPF CURVED?
NOT ALL FACTORS OF PRODUCTION ARE EQUALLY SUITED TO PRODUCTION OF DIFFERENT GOOD.
DUE TO LAW OF DIMINISHING RETURNS.
