1.1.1 Economics as a social science & 1.1.2 Positive & Normative economic statements & 1.1.3 The economic problem

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6 Terms

1
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Definition of economics

A social science

  • cannot make scientific experiments

2
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Definition of ceteris paribus

All other influencing factors are held constant

3
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Distinction between positive & normative economic statements

  • Positive statement = can be tested as true or false

  • Normative statement = cannot be tested as true or false, it is based on a value judgement

    • How to indicate it: contains unfair, fair, ought, unjustified - suggesting it is a value judgement

  • Analysis on the difference between Positive & Normative statement: Objective VS Subjective

4
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What is the economic problem

Scarcity - where there are unlimited wants & finite resources (demand more than supply)

5
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Distinction between renewable & non-renewable resources

Renewable:

  • infinite

Non-renewable

  • finite (oil, coal, natural gas)

6
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The importance of opportunity costs to economic agents

Opportunity cost = cost of the next best alternative forgone