Chapter 1 - Scarcity and Choice - Key terms Flashcards
Scarcity
a situation that arises because people have unlimited wants in the face of limited resources
Opportunity Cost
in decision making, the value of the next best alternative forgone.
Factors of Production
resources used in the production process; inputs into production, including land, labour, capital and enterprise.
Model
a simplified representation of reality used to provide insight into economic decisions and events
Production possibility curve (PPC)
a curve showing the maximum combinations of goods or services that can be produced in a set period of time given available resources.
Economic growth
an expansion of the productive capacity of an economy.
Gross domestic product (GDP)
a measure of the economic activity carried out in an economy during a period.
Division of labour
a process whereby the production process is broken down into a series of stages and workers are assigned to each stage.
Market
a set of arrangements that allows transactions to take place.
Microeconomics
the study of economic decisions taken by individual economic agents.
Macroeconomics
the study of the interrelationships between economic variables an aggregate (economy-wide) level.
Positive statement
an objective statement about what is ( needs facts).
Normative statements
a statement involving a value judgement about what ought to be.
