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