Economics As A Social Science Flashcards
How does economics differ from other sciences ?
In many sciences, experiments help to prove scientists thoughts. However, economics relies on real world actions involving real people.
Models ?
• Help explain the multiple choices we make in our daily lives
• Used to predict the impact of economic experiments
• Rely on assumptions to allow economists to work in simplified conditions
• Assumptions can make models unrealistic but doesn’t defy its effectiveness.
Definition Of Ceteris Paribus
Other things being equal.
How does ceteris paribus help with models ?
Allows economists to work in models where all other variables are held constant and only one thing changes
What is the basic economic problem ?
•How to allocate scarce resources given unlimited wants
• Can be explained by the concept of scarcity.
What three questions do economists answer to solve the economic problem ?
1) What goods or services should be produced ?
2) How should these goods or services be produced ?
3) For whom should the goods or services be produced ?
Definition Of Factors Of Production
The resources required in the manufacture of goods or services.
What are the factors of production ? (4)
• Land
• Labour
• Capital
• Enterpise
What is land ?
All the resources on and beneath the land in the sea (e.g. minerals, oil and gas), as well as agricultural output and the land used to build factories, offices and shops.
What is labour ?
The workers needed to produce and sell goods and services.
What is Capital ?
The machinery required to help produce, transport and sell goods and services.
What is enterprise ?
Entrepreneurs who identify and coordinate a project and often bear the risk associated with the activity.
Definition Of Opportunity Cost
The benefit associated with the next best alternative foregone.
