Economic Methodology And The Economic Problem KW Flashcards
Allocative efficiency
When economic resources are utilised to produce the combination of goods and services that maximise economic welfare
Allocative price function
Prices allocate resources away from markets with excess supply to markets with excess demand
What is capital?
Producer goods used in the production of other goods
What is ceteris paribus?
All other things being held constant
What is choice?
Selecting one of multiple alternatives when deciding how to allocate scarce resources
What is a consumer good?
Goods consumed by households and individuals
Used to satisfy needs and wants
What is economic welfare?
the economic satisfaction/wellbeing of individuals/households/groups in an economy
What is imperfect information?
When individual lack the information to make the best decision
What is the incentive price function?
Prices creating incentives for people to adjust their economic transactions
What is infrastructure?
Facilities required for an economy to function
What is a need?
Something necessary for human survival
What is a signaling price function?
Prices providing information to sellers and buyers
Influencing economic decisions
What is trade?
Buying and selling of goods and services
What is a want?
Something desireable, yet not necessary fro human survival
What are value judgements?
Statements that are subjective and based on opinion rather than factual evidence
