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A-Level Economics > 1.1 - Nature Of Economics > Flashcards

1.1 - Nature Of Economics Flashcards

1
Q

What Kind Of Science Is Economics?

A

A social science.

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2
Q

What Is A Social Science?

A

Studies societies and the human interactions with those societies.

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3
Q

Why Are Human Interactions Complex?

A

Because they are influenced by many changing variables.

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4
Q

Why Do Economists Build Models?

A

Because of complexities within societies and also to better understand certain human interactions.

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5
Q

What Are Examples Of Complex Models?

A

~ The circular flow of income model
~ Supply and demand models

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6
Q

How Are These Economic Models Developed?

A

~ Putting forward a model
~ Gathering evidence
~ Accepting, changing or disregarding the model

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7
Q

Why Are Assumptions Made?

A

Because there are too many variables which can change within the economic model.

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8
Q

What Is Ceteris Paribus?

A

All other things remain equal.

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9
Q

How Does Ceteris Paribus Benefit Economists?

A

Allows them to simplify and explain causes and affects.

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10
Q

What Is The Difference Between Natural And Social Sciences?

A

~ Natural sciences is observing aspects of the universe
~ Social sciences is observing human behaviour

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11
Q

Why Is It Difficult To Set Up Experiments To Test Hypotheses?

A

~ Economist has to gather the data
~ Other variables are always changing

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12
Q

Who Are Economic Models Developed By?

A

Economists.

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13
Q

What Is A Positive Statement?

A

A statement which is an objective and made without any obvious value judgements or emotion.

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14
Q

What Are Positive Statements Based On?

A

Empirical evidence.

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15
Q

Can Positive Statements Be Proven?

A

Yes, they can be proven true or false.

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16
Q

How Are Positive Statements Often Expressed?

A

They are often expressed in the form of a hypothesis that can be analysed and evaluated.

17
Q

What Is A Normative Statement?

A

~ A statement which is built around opinions and beliefs
~ Focuses on value judgement

18
Q

Can Normative Statements Be Proven?

A

No, they cannot be proven or disproven.

19
Q

What Is Value Judgement?

A

Influences individuals choices in the economic decisions they make.

20
Q

What Is The Basic Economic Problem?

A

Resources are scarce.

21
Q

Why Are Resources Scarce?

A

Because there are finite resources available in relation to the infinite wants and needs that humans have.

22
Q

What Are ‘Resources’ Referring to?

A

Factors of production.

23
Q

In A Free Market What Does Scarcity Have A Direct Influence On?

A

Prices.

24
Q

The Scarcer A Resource, What Happens To The Price?

A

Higher the price.

25
Q

The Less Scarce A Resource, What Happens To The Price?

A

Lower the price.

26
Q

What Are Renewable Resources, Give Examples?

A

~ Are resources that can be used repeatedly and naturally replenished
~ Wind generated electricity

27
Q

What Are Non-Renewable Resources, Give Examples?

A

~ Are resources that cannot be naturally replenished at a pace that keeps up with consumption
~ Oil and coal

28
Q

What Is Opportunity Cost?

A

The cost of the next best alternative after a decision is made.

29
Q

How Does Opportunity Cost Affect Consumers?

A

Consumers will make choices on how to use their limited income based on what gives them the greatest level of satisfaction.

30
Q

How Does Opportunity Cost Affect Producers?

A

Producers must choose what to do with their limited resources and their decisions will be based on maximising profit.

31
Q

How Does Opportunity Cost Affect The Government?

A

The government must make decisions on where they should spend their limited tax revenues based on what will maximise welfare.

32
Q

What Are The 4 Factors Of Production?

A

~ Capital
~ Enterprise
~ Land
~ Labour
~ (CELL)

33
Q

What Is Capital?

A

Man-made resources that are used to produce goods and services in the future.

34
Q

What Is Enterprise?

A

The willingness and ability to take risks of combining the other 3 factors of production in order to make a product or service.

35
Q

What Is Land?

A

All the natural resources used in production.

36
Q

What Is The Acronym We Use For The Factors Of Production?

A

CELL.

37
Q

What Is Labour?

A

All the productive human effort both physical, mental, paid or unpaid.

A-Level Economics (10 decks)

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