1. Economic Methodology and the Economic Problem

Question 1

What is a Positive Statement?

Answer 1

A statement that can be tested against the facts to be declared as true or false

Question 2

What is a Normative Statement?

Answer 2

A subjective opinion

Question 3

What is Economic Welfare?

Answer 3

The standard of living or general well-being of people in society.

Question 4

What are the four factors of production?

Answer 4

Land
Capital
Labour
Enterprise

Question 5

What is Land? (Factors of Production)

Answer 5

Natural resources such as fertile land, minerals, water, etc…

Question 6

What is Capital? (Factors of Production)

Answer 6

Man-made physical equipment to make other goods and services (machinery)

Question 7

What is Labour? (Factors of Production)

Answer 7

People involved in production, sometimes called human capital.

Question 8

What is Enterprise? (Factors of Production)

Answer 8

Individuals who take a business risk to create the good/service using the other 3 factors of production.

Question 9

What is the basic economic problem?

Answer 9

Scarce resources, unlimited wants.

Question 10

What is an opportunity cost?

Answer 10

The cost of the next best alternative that you give up when making a choice