Definitions Flashcards
Consumer sovereignty
Power of consumers to determine goods and services produced
Power of consumers to decide what goods and services are produced
Consumer sovereignty
Opportunity cost
Next best thing you have to give up to produce
Next best thing you have to give up to produce
Opportunity cost
Positive statement
One which can be tested , helps to build theory and models
A statement which is tested , helping to build models and theories
Positive statement
Normative statement
Subjective , based on researched values and opinionated
A statement Subjective , based on researched values and opinionated
Normative statement
Free market
One motivated by self interest and private ownership
A market motivated by self interest and private ownership
Free market
Invisible hand theory , Adam smith
Pursue self interests , which in turn in best interest for society
Pursue self interests , which in turn in best interest for society
(What and who)
Invisible hand theory Adam smith
Marginal utility
Satisfaction change from consuming an extra unit
Satisfaction change from consuming an extra unit
Marginal utility
Derived demand
Demand for a FoP used to produce other goods
When demand for cars increases , demand for the raw materials increase
