The Economic Problem (Ch1)

Description

Key Vocab
Twidster0502
Flashcards by Twidster0502, updated more than 1 year ago
Twidster0502
Created by Twidster0502 over 10 years ago
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Resource summary

Question Answer
Goods Tangible Products e.g. CD
Services Non-tangible products e.g. trip to the cinema
Economic Welfare The benefit or satisfaction received by an individual or society from the allocation of resources
Opportunity Cost The next best alternative given up when an economic decision is made
Economic Goods Goods that are scarce and therefore have an opportunity cost
Free Goods Goods that have no opportunity cost e.g. air
Factor Market The market for the factors of production that make other goods and services e.g. raw materials
Renewable resources Resources that are able to be replenished over time e.g. wood
Non renewable Resources Resources that are not able to be replenished over a period of time e.g. oil
Profit When total income or revenue for a firm is greater than total costs
Free Market Economy A market where there is limited government involvement in providing goods and services
Production Possibility Boundary
Productive Efficiency When a firm operates at minimum average total costs, producing the max. possible output from inputs
Allocative Efficiency This is achieved when it is not possible to make anyone better off without making someone worse off
Productivity A measure of efficiency, the ratio of inputs to outputs. Most common; output per worker
Human Capital The skills, abilities, motivation and knowledge of labour
Division of Labour Breaking the production process down into a sequence of tasks, with workers assigned tasks
Specialisation The production of a limited range of goods by and individual factor of production/firm/country
Value Judgements Statements or opinions made that are not testable/cannot be verified (views of individual)
Normative Statement Opinions that require value judgements to be made
Positive Statements Statements that can be tested against real world data
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