Economics vocabulary week 1

Capital

The factor of production that relates to physical machinery or Money.

Ceteris paribus

is a latin phrase meaning other things being held constant. Economists use it to measure the effect of one variable on another while holding all other variables constant.

Economic Change

is a shift in the structure of an economic system. This results in changes to societies, cultures and everyday life on a global or national basis.

Choice

refers to the ability of a consumer or producer to decide which good, service or resource to buy or from a range of possible options. The freedom to make choices is an important feature of economic development.

Constant opportunity cost

when the opportunity cost of producing a good or service does not change as more is produced. It is associated with a linear PPC curve.

Economics

the branch of knowledge concerned with the production, consumption, and transfer of wealth. Making economic decisions involves opportunity cost in a world with scarce resources.

Economic Well-being

goes further than the level of and rate of growth of GDP. Economic well-being is a multi-dimensional concept and involves looking at GDP per capita, access to education and health care as well as other measures of economic freedom.

Economic goods

refer to goods that cannot be consumed without occurring an opportunity cost. Economic goods are scarce and have some utility or benefit to society.

Efficiency

Efficiency is concerned with the optimal production and distribution of scarce resources.There are different types of efficiency, allocative, productive efficiency. Allocative efficiency is concerned with producing the right amount of resources from societies point of view. It occurs where the marginal cost of producing a good is equal to its Price (Marginal Social Cost = Marginal Social Benefit). Productive efficiency is concerned about making sure resources are produced at their lowest cost.

Entrepreneurship

The factor of production that is concerned with individuals creating new businesses by bringing together the other factors of production land, labour and capital.