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Economics A-level > 4.1.1 Economic Methodology And The Economic Problem > Flashcards

4.1.1 Economic Methodology And The Economic Problem Flashcards

1
Q

What are features of a positive statement?

A
  • Objective
  • Can be tested with factual evidence
  • Can be right or wrong
  • “will” / “is”
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2
Q

What are features of a normative statement?

A

-Subjective
- based on opinion and value judgements
- “should”

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3
Q

What are people’s views influenced by?

A

The positive consequences of different decisions and moral and political judgement

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4
Q

How is economics different to other sciences?

A

Economists cannot conduct scientific experiments
So they used models to make assumptions instead

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5
Q

What is ceteris paribus?

A

The assumption that all other things remain constant - so nothing else changes

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6
Q

What is the purpose of economic activity?

A

To produce goods and services which satisfy the consumer needs and wants

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7
Q

What are economic outputs?

A

The goods and services

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8
Q

What’s are economic resources?

A

Inputs in the form of the factors of production

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9
Q

What are the key economic decisions?

A
  • What to produce?
  • How to produce?
  • Who will benefit form the goods and services produced?
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10
Q

What are the factors of production?

A

Land
Labour
Capital
Enterprise

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11
Q

What is capital? Give examples.

A

Goods which can be used in the production process
Eg. machines and buildings

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12
Q

What is enterprise?

A

People taking risks and innovating

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13
Q

What is land? Give examples.

A

Natural resources or the physical space for capital
Eg. oil, coal, wheat, water, land

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14
Q

What is labor?

A

Human capital which is the workforce of the economy

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15
Q

What is the reward/incentive for capital?

A

Interest from the investment

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16
Q

What is the reward/incentive for enterprise?

A

Profit

17
Q

What is the reward/incentive for land?

A

Rent

18
Q

What is the reward/incentive for labor?

A

Wages

19
Q

Why is the environment a scarce resource?

A

Because there are only a limited amount of resources on the planet

20
Q

What are renewable resources? Give examples.

A

Resources which can be replenished faster than they are consumed
Eg. oxygen, solar power, fish

21
Q

What are non-renewable resources? Give examples.

A

Resources which decrease in stock-level as they are consumed
Eg. coal, oil, gas

22
Q

How can environmental scarcity be managed?

A
  • Limiting deforestation
  • Imposing fish quotas
  • recycling
  • substitutes for energy
23
Q

What is the fundamental economic problem?

A

Scarcity resulting from limited resources and unlimited wants

24
Q

What is the opportunity cost?

A

The value of the next best alternative forgone

25
Q

Where is productive efficiency?

A

Points A and B

26
Q

What is the law of diminishing returns?

A

The opportunity cost of producing more of product A increases as the lost units of product B that could’ve been produced increases

27
Q

What would producing at points C or D (under the curve) mean?

A

Productive inneficiency
As resources are not used to their full productive potential

28
Q

What does point E mean?

A

Producing at E is not yet attainable with the current resources

29
Q

How do you show economic growth on a PPF?

A

Curve shifts outwards

30
Q

How can an outward shift in the PPF be achieved?

A

Using supply side policies
To increase resources
OR
To increase quality of existing resources

31
Q

What are capital goods?

A

Goods which can be used to produce other goods

32
Q

What are consumer goods?

A

Goods which cannot be used to produce other goods

33
Q

Why are all points on the PPF boundary productively efficient?

A

Because resources are being used to their productive potential

34
Q

Why are not all points on the PPF curve allocatively efficient?

A

Because more of one good cannot be produced without reducing the amount of the other product available

35
Q

What is allocative efficiency?

A

When no one can be made better off without making someone else worse of

36
Q

How could allocative efficiency be gained?

A

If more of both goods were produced as this would improve welfare

37
Q

What does the PPF show and fail to show?

A
  • Shows potential output
  • Does not shoe how goods are distributed in society (allocative efficiency)

Economics A-level (15 decks)

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