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Full flashcard set for Economic Methodology section of AQA Economics
Economics is a …
Social science that is subject to prejudice and conditions for testing are uncontrollable
Ceteris Paribus means
all other factors are the same - when one factor is changed it is assumed all others stay the same
Positive Statements are
Objective and factually based statements that can be tested (facts)
Normative Statements are
subjective questionable statements that cannot be tested (opinions)
Economic decision making is influenced by
The opportunity cost of all alternative options
All decisions are based off of positive and normative judgements
The purpose of economic activity is…
To produce goods and services to satisfy needs and wants
Needs are
things required for survival
Wants are
things desired but not essential
Factors of Production
Land
Labour
Capital
Enterprise
Labour is
The workforce - value of a worker is human capital
Land is
All the natural resources used in production.
Capital is
Man-made aids to production
Enterprise is
The individual or business who take the initiative to set up a business and employ different factors of production
The Economic Problem is
People have unlimited wants but there aren’t enough resources to satisfy them
The Economic Problem occurs when
finite resources are unable to meet unlimited wants
3 basic questions of economics
What to produce?
How to produce?
Who to produce for?
PPC’s show
the different combinations of the output of two products - as the output of good x increases that of good y decreases and vice versa
The concepts of scarcity, choice and opportunity cost
Shifts in PPC
Caused by economic growth or shrinkage
Economic growth is
Caused by an increase in the quality or quantity of production
Productive efficiency
Occurs along the PPC curve
Where society is using its resources efficiently
Allocative efficiency
Occurs at one point on the curve where social welfare is maximised
Where production is the most beneficial to society
Note 
Flashcard (32)