Unit 1- Economic Problem

Question 1

Define a Positive statement

Answer 1

A statement of fact that can be scientifically tested to see if it is true

Question 2

Define a normative statement

Answer 2

A statement that includes a value judgement and cannot be proven by facts/ evidence

Question 3

Define a “need”

Answer 3

Something that is required for humans to survive such as, food , clothing

Question 4

Define a want

Answer 4

Something that is desirable such a fashionable clothing but not required to survive

Question 5

Economic welfare

Answer 5

The economic wellbeing of an individual a group within society or economy

Question 6

Define production

Answer 6

A process or set of processes that converts inputs into output of goods

Question 7

Define capital goods

Answer 7

A good which is used in the production of other goods or services//producer good

Question 8

Define consumer good

Answer 8

A good which is consumed by individuals or households to satisfy needs or wants

Question 9

Define Factors of production

Answer 9

Inputs into the production process such as land labour capital and enterprise

Question 10

What is meant by finite resources

Answer 10

A resource such as oil which is scarce and runs out as it is used

Question 11

Renewable resource meaning?

Answer 11

A resource such as timber that Can be carefully managed and renewed as it is used

Question 12

Fundamental economic problem

Answer 12

How best to make decisions about the allocation of scarce resources among competing used so as to improve and maximise human happiness and welfare

Question 13

Define Scarcity

Answer 13

Results from the fact that people have unlimited wants but resources to meet these wants are limited. Essentially people have unlimited wants but finite resources

Question 14

Opportunity cost define

Answer 14

The cost of giving up the next best alternative

Question 15

Define PPF

Answer 15

A curve depicting the various combinations of two products that can be produced when all available resources are fully and efficiently employed

Question 16

Define economic growth

Answer 16

The increase in the potential level of real output the economy can produce over a period of time

Question 17

Unemployment

Answer 17

When not all those able and willing to work are employed

Question 18

Define Resource allocation

Answer 18

The process through which the available factors of production are assigned to produce different goods and services eg: how many of the society’s economic resources are devoted to supplying different products such as food,cars,healthcare and defence

Question 19

“Choice”

Answer 19

Choosing between how to use scarce resources

Question 20

Define Productive efficiency

Answer 20

For the economy as a whole occurs when it is impossible to produce more of one good without producing less of another. For a firm it occurs when the average total cost of production is minimised

Question 21

Define Allocative efficiency

Answer 21

Occurs when the available economic resources are used to produce the combination of goods and services that best matches people’s tastes and preferences.