1 The economic problem Flashcards
1
Q
Economics
A
The study of how scarce/limited resources are used in the world
2
Q
Economic goods
A
Gods that are scarce,i.e. there is not an unlimited supply of these goods
3
Q
Scarcity
A
When there is a limited amount of something
4
Q
Free goods
A
Resources that are usually not seen as limited, such as sunlight or air
5
Q
The economic problem
A
how to make the best use of limited or scarce resources
6
Q
Positive statements
A
factual statements that can be tested
7
Q
normative statements
A
Opinion-based statements that can be agreed or disagreed with
8
Q
Economic agents
A
Key groups involved in the economic problem, including governments, firms and households
9
Q
Households
A
- A user/consumer of goods and services
- households provide workforce fro businessess/firms i.e. labour force
10
Q
Firms
A
- producer of goods and services
- purchaser of the goods and services they use in production process
11
Q
Government
A
- use taxation and spending to influence micro economy
- often employed to improve society
12
Q
Rationality
A
- assumption that each economic agent acts in their own best interest
13
Q
Household rationality
A
- aims to maximise their own satisfaction
- thinking about the value of product vs its price
14
Q
Firms rationality
A
- aims to maximise their profits
15
Q
Government rationality
A
- aims to maximise welfare
