the study of how to allocate scarce resources to produce in the most efficient way
New cards
2
Microeconomics
the study of economic decisions made by individual economic agents e.g. firms
New cards
3
Economic model
a simplified version of reality that allows us to study economic behaviour
New cards
4
Social science
the study of human behaviour
New cards
5
Ceteris Paribus
all other things remain constant except one determinant
New cards
6
Positive statement
scientific and objective statements that can be proved to be either true or false with data and evidence
New cards
7
Normative statements
can't be supported or disproved and are peoples own judgements
New cards
8
Scarcity
when the demand for a resource is greater than the supply of that resource so it is limited
New cards
9
Economic goods
goods made with scarce factors
New cards
10
Free goods
goods made with factors that are not scarce
New cards
11
Factors of production
Land, labour, capital and enterprise
New cards
12
Land
all the natural resources of the economy including mineral deposits and other natural resources including the land itself
New cards
13
Labour
all the human resources and not just the quantity or number of workers but also their quality and productivity
New cards
14
Capital
machinery and anything else that is a man made aid to production
New cards
15
enterprise
individuals who take other factors and organise them to produce goods and services
New cards
16
PPF Curve
shows the maximum combination of goods and services produced in an economy assuming the factors are all working at maximum efficiency
New cards
17
Opportunity cost
the cost of the next best alternative forgone
New cards
18
Specialisation
where workers, firms or economies tend to concentrate on specific tasks and not any other tasks
New cards
19
Division of Labour
when workers specialise and concentrate on one task
New cards
20
Price mechanisms
the way price responds to changes in demand or supply for a product or factor input ( use of market forces to allocate resources in order to solve the economic problem of what, how, and for whom to produce)
New cards
21
Functions of money
Medium of exchange
Measure of value
Store of value 4)Deferred payment
New cards
22
Forms of money
1)Cash
2)Current accounts
3)Near monies
4)Non-money Financial assets
5)Money substitutes
New cards
23
Command economy
Where government controls and decides economic decisions
Studied by 4 people
