What is Economics? Flashcards
What are Goods and Services?
Goods and tangible products that are produced. They have a physical form. The device you are using to view this presentation is a good.
Services are intangible products that are produced. They have no physical form. Your teacher provides a service.
Define Firms, Households and Government
Firms provide goods and services. They also employ labour and provide households with wages to purchase goods and services.
Households provide labour to firms to produce goods and services. They also buy and consume the goods and services that firms produce.
Government collects taxes from firms and households and redistribute wealth and income to maximise the welfare of society.
What is The Economic Problem?
The economic problem is that there are unlimited wants and Needs but limited resources.
What are free goods?
Free goods are resources that seem abundant and cost nothing to use.
As they are free, there is no opportunity cost in using them. E.g. to use a free good it costs me nothing and so I don’t have to sacrifice something else.
Examples of free goods include air, oceans, rivers, etc
Why is economics a ‘Social Science’?
Traditional sciences (Physics, Chemistry and Biology) can find cause and effect accurately with the correct experiments.
Social sciences (Economics, Psychology and Sociology) find it more difficult to establish cause and effect.
This is because to find cause and effect we need to control the variables (make sure that the outcome is caused by the thing we think caused it rather than something else).
