AQA Economics A-level Paper 1: Microeconomics - Topic 1 Flashcards

Flashcards covering definitions and concepts for AQA Economics A-level Paper 1: Microeconomics - Topic 1 Economic Methodology and the Economic Problem.

What is Allocative efficiency?

When economic resources are utilised to produce the combination of goods and services that maximise economic welfare.

What is Allocative price function?

Prices allocate resources away from markets with excess supply to markets with excess demand.

What is Capital/producer goods?

Goods used in the production of other goods.

What is Ceteris paribus?

All other things being held constant

What is Choice?

Selecting one of multiple alternatives when deciding how to allocate scarce resources.

What is a Consumer good?

Goods consumed by households & individuals, used to satisfy needs and wants.

What is Economic welfare?

The economic satisfaction/wellbeing of individuals/households/groups in an economy.

What is Enterprise?

The ability to utilise factors of production effectively

What are Factors of production?

Inputs of the production process, such as land, labour, capital and enterprise.

What is a Finite resource?

Non-renewable resource that becomes increasingly scarce.

What is the Fundamental economic problem?

Deciding how to best allocate scarce resources to maximise overall economic welfare.

What is Imperfect information?

When individuals lack the information to make the best decision.

What is Incentive price function?

Prices create incentives for people to adjust their economic transactions.

What is Infrastructure?

Facilities required for an economy to function

What is Labour?

Workers with human capital

What is Land?

Natural physical materials, as well as space for fixed capital

What is a Need?

Something necessary for human survival, e.g. food, shelter.

What is a Normative statement?

Statements including value judgements, that cannot be easily proved/disproved.

What is Opportunity cost?

Loss of other alternatives due to selecting one of a set of options.

What is Pareto efficiency?

State of resource allocation, where in order to make an economic agent better off, another agent is made worse off

What is a Positive statement?

Statements including facts, that can easily be proved/disproved.

What is a Production possibility frontier?

A curve displaying the various possible combinations of two products that can be produced with finite resources.

What is Rationing price function?

Prices rise to ration demand for goods.

What is a Renewable resource?

Restorable resource that can be replenished.

What is Scarcity?

Resulting from the concept of infinite wants and needs, yet limited resources.

What is Signalling price function?

Prices provide information to sellers and buyers, influencing economic decisions.

What is Trade?

Buying and selling of goods and services.

What are Value judgements?

Statements that are subjective and based on opinion rather than factual evidence

What is a Want?

Something desirable, yet not necessary for human survival.