3594014
Description
Flashcards by Libby Rose, updated more than 1 year ago
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Created by Libby Rose
over 8 years ago
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| Question | Answer |
| Positive statement | A fact that can be tested. These are statements that can be proved or disproved by examining facts. They deal with objective or scientific explanations of the economy. |
| Normative statement | They contain value judgements. They are subjective meaning that they are based on individuals' opinions or moral attitudes. Therefore they cannot be proved or disproved. They are personal judgements, using words like ought/should/think |
| Ceteris Paribus | Helps economists simplify models and focus on the impact of one change "holding other things constant" |
| Scarcity | The basic economic problem that arises because people have unlimited wants but resources are limited. Because of scarcity various economic decisions must be made to allocate resources efficiently |
| Opportunity Cost | The next best alternative forgone |
| Factors of production | The inputs that are used in the production of the goods or services in an attempt to make an economic profit. Land labour, capital and enterprise. |
| Renewable resources | Can be exploited over and over because they have the potential to renew themselves eg. solar energy, wind, geothermal pressure etc |
| Non-renewable resources | Once exploited cannot be replaced eg. coal, gold and petrol |
| Gross domestic Product (GDP) | The broadest quantitative measure of a nation's total economic activity. Represents the monetary values of all goods and services produced within a nation's geographic borders over a specific period of time. |
| Division of labour | Dividing a job into many specialised parts, with a single worker or a few workers assigned to each part. It is important to mass production. |
| Production Possibility Frontier (PPF) | The different combinations of economic goods that can be produced by an economy if all resources are fully and efficiently employed. |
| Market system | An economic system that relies upon markets to allocate scarce resources and determine prices |
| Demand | The quantity of a good or service that a consumer is willing and able to buy at a given price in a given period of time. |
| Maximisation | Economic agents act in a way that will maximise their net benefits. |
| Rational | Economic agents are able to rank the order of different outcomes from an action in terms of their net benefits to them. They then act in a way that will maxmise these net benefits. |
| Non rival public goods | They do not diminish as they are consumed |
| Non excludable public goods | Even if you do not pay tax, you will be able to use them. |
| Demerit goods | A good which has costs that people do not realise or choose to ignore eg. drugs, smoking, pollution |
| Merit goods | A good that people do not realise the true value of eg. vaccinations and education |
| Mixed economy | An economy where both the free market mechanism (D & S) and the Government planning process allocates a significant proportion of resources. |
| Command economy | The Government allocates resources. Involves large scale micromanagement by central Government |
| Market economy | Resources are allocated by the operation of market forces demand and supply working through the price mechanism |
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