Unit 1 - What is Economics? Flashcards
What is the Fundamental Economic Problem?
The fact that individuals within an economy have individual wants while there are scarce resources available to meet these wants.
Meaning of Scarcity in Economics?
The state of being in short supply, especially relative to how much something is demand.
What is Economic Activity?
Any time resources are processed to produce goods or services.
What is Opportunity Cost?
The value of the next option which is forgone, when the better alternative is given up, during a economic decision making process.
Why does Scarcity lead to Opportunity Cost?
During Scarcity of resources we have to make choices on how to use these resources, before they deplete. Choices are prioritised based on how impactful they are, which means the next best alternative choice is normally forgone/sacrificed. The next best alternative that is given up - for the superior option - is considered as the opportunity cost.
Key differences between Natural sciences and Economics?
Economics is a social science, that is interested about the economy and its impact on society. Whereas natural sciences are more concerned with the universe.
Economics is a social science, and, unlike the other sciences, cannot engage in controlled experimentation to demonstrate how variables are connected, as so many other factors cannot be controlled. However this is not the case with natural sciences, as variables can be tested and controlled in a laboratory.
Key similarities between Natural sciences and Economics?
They are both interested in methods involving observing the world to construct theories and models.
Often involve scientists attempting to falsify and test these models and theories.
Meaning of Positive Statement?
An objective, fact based statement which could in principle be shown to be true or false.
Try to predict reality.
Meaning of Normative Statement? (Considered by sciences)
A subjective statement based upon opinion which cannot be proven or disproven.
These statements normally carry value judgements.
What is a Value judgement?
A judgement on what is good or bad, important or valuable, based upon subjective opinion, which inform economic and political decision making.
What is a Natural science?
Observation of aspects concerning universe.
What is a Social science?
Observation of human behaviour.
What is a Merit good?
A service that is deemed deserving or public finance.
What is a demerit good?
A good or service whose consumption is considered unhealthy, degrading, or otherwise socially undesirable due to perceived negative feedback.
Authoritarianism central beliefs?
One figure head is to rule with unquestioning obedience from the ruled.
