Economic Methodology Flashcards
What is a social science?
A social science studies societies and the human interactions within those societies
How is economic a social science?
It involves the study of human behaviour and the way that individuals and societies make choices.
What is the basic economic problem?
How to allocate scarce resources (CELL), given that their is unlimited needs and wants
What are the four factors of productions?
Capital
Enterprise
Land
Labour
What are the three fundamental choices to allocate resources?
1) What to produce?
2) How to produce?
3) For whom to produce for?
What is an opportunity cost?
The cost of the next best alternative is foregone when a choice is made
e.g. If you buy a game you cant buy a movie
How do we measure a choice in economics?
Opportunity cost
What is Cetris Paribus?
All other factors are constant
What is a need and a want?
A need: something that we can’t live without e.g. water
A want: Things people can live without but desire e.g. A phone
What is short terminism?
Choices are motivated by short-term gain e.g. lowering income tax today
What is a positive statement?
Object statements that can be proved
EXAMPLE: HS2 railway - If benefits exceed the exact costs then the project is worth doing
What is a normative judgement?
Opinions that contain a value judgement
EXAMPLE: higher unemployment benefits during a recession as rich countries should care for it’s citizens
What is a value judgement?
They are judgements that cannot be quantified and tested
What is scarcity?
When our needs and wants are greater than the amount of available resources
What is automation?
Automation is a production technique that uses capital machinery/ technology to enhance or replace human labour
