Unit 1- Economic Problem Flashcards
Define a Positive statement
A statement of fact that can be scientifically tested to see if it is true
Define a normative statement
A statement that includes a value judgement and cannot be proven by facts/ evidence
Define a “need”
Something that is required for humans to survive such as, food , clothing
Define a want
Something that is desirable such a fashionable clothing but not required to survive
Economic welfare
The economic wellbeing of an individual a group within society or economy
Define production
A process or set of processes that converts inputs into output of goods
Define capital goods
A good which is used in the production of other goods or services//producer good
Define consumer good
A good which is consumed by individuals or households to satisfy needs or wants
Define Factors of production
Inputs into the production process such as land labour capital and enterprise
What is meant by finite resources
A resource such as oil which is scarce and runs out as it is used
Renewable resource meaning?
A resource such as timber that Can be carefully managed and renewed as it is used
Fundamental economic problem
How best to make decisions about the allocation of scarce resources among competing used so as to improve and maximise human happiness and welfare
Define Scarcity
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
Opportunity cost define
The cost of giving up the next best alternative
Define PPF
A curve depicting the various combinations of two products that can be produced when all available resources are fully and efficiently employed
Define economic growth
The increase in the potential level of real output the economy can produce over a period of time
Unemployment
When not all those able and willing to work are employed
Define Resource allocation
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
“Choice”
Choosing between how to use scarce resources
Define Productive efficiency
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
Define Allocative efficiency
Occurs when the available economic resources are used to produce the combination of goods and services that best matches people’s tastes and preferences.
