Introductory Concepts

Question 1

Social Science

Answer 1

The study of societies and human behaviour using a variety of methods, including the scientific method.

Question 2

Ceteris Paribus

Answer 2

All things being equal

Question 3

Disposable income

Answer 3

The amount of money you have left to spend after you have pay your taxes and bills

Question 4

Empirical

Answer 4

Based on scientific testing or practical experience, not on ideas

Question 5

Good

Answer 5

A thing that is produced in order to be sold

Question 6

Hypothesis

Answer 6

An idea that is suggested as an explanation for something, but that has not yet been proved to be true

Question 7

Inequality

Answer 7

An unfair situation, in which some groups in society have more money, opportunities, or power than others

Question 8

Law

Answer 8

A theory or model that has been verified by empirical evidence

Question 9

Normative economics

Answer 9

The study and presentation of policy prescriptions involved value judgements about the way in which scare resources are allocated

Question 10

Normative statements

Answer 10

Statements that cannot be supported or refuted because it is a value judgement

Question 11

Positive economics

Answer 11

The study and presentation of policy prescriptions involving value judgement

Question 12

Positive statements

Answer 12

Statements that can be refuted because it is a value judgement

Question 13

Production possibility frontier

Answer 13

Shows how much an economy can produce given existing resources

Question 14

Scientific method

Answer 14

A method that subjects theories or hypotheses to being disproved by empirical evidence

Question 15

Theory or model

Answer 15

A hypothesis that is capable of being refuted by empirical evidence

Question 16

Basic economic problem

Answer 16

Resources have to be allocated between completing uses because wants are infinite but resources are scare

Question 17

Capital

Answer 17

As a factor of production is the stock of manufactured resources used in the production of goods and services

Question 18

Choice

Answer 18

Economic choices involved the alternative uses of scare resources

Question 19

Economic goods

Answer 19

Goods that are scare because their uses has an opportunity cost

Question 20

Enterprise or entrepreneurship

Answer 20

As a factor of production is the seeking out of profitable opportunities for production and taking risks in attempting to exploit these

Question 21

Entrepreneurs

Answer 21

Individuals who seek out profitable opportunities for production and take risks in attempting to exploit these

Question 22

Factors of production

Answer 22

The inputs to the production process: land, labour, capital and enterprise or entrepreneurship

Question 23

Fixed capital

Answer 23

Economics resources, such as factories and hospitals, that are used to transform working capital into goods and services

Question 24

Free goods

Answer 24

Goods that are unlimited in supply and therefore have no opportunity cost

Question 25

Human capital

Answer 25

The value of the productive potential of an individuals or group or workers; it is made up of the skills, talents, education and training of an individual or group and represents the value of future earnings and production

Question 26

Labour

Answer 26

As a factor of production is the workforce

Question 27

Land

Answer 27

As a factor of production is all natural resources

Question 28

Needs

Answer 28

The minimum that is necessary for a person to survive as a human being

Question 29

Non-renewable resources

Answer 29

Resources, such as coal or oil, which once exploited cannot be replaced

Question 30

Non-sustainable resources

Answer 30

A resource which that can be economically exploited in such as a way that its stock is being reduced over time

Question 31

Opportunity cost

Answer 31

The benefits of the next best alternative that are given up

Question 32

Renewable resource

Answer 32

Resources, such as fish stocks or forests, that can be exploited over and over again because they have the potential to renew themselves

Question 33

Scare resources

Answer 33

Resources that are limited in supply so that choices have to made about their use

Question 34

Wants

Answer 34

Desire for the consumption of goods and services

Question 35

Woking or circulating capital

Answer 35

Resources that are in production system waiting to be transformed into goods or other materials before being finally sold to the consumer

Question 36

Allocative efficient

Answer 36

Allocative effiency occurs when social welfare is maximised. The distribution of resources is such that it is not possible to redistribute them without making something worse off

Question 37

Capital goods

Answer 37

Goods that are used in the production of other goods, such as factories, offices, roads, machines and equipement

Question 38

Consumer goods

Answer 38

Goods and services that are used by people to satisfy their needs and wants

Question 39

Margin

Answer 39

A point of possible change`

Question 40

Production possibility frontier

Answer 40

A curve that shows the maximum potential level of output of one good given a level of output for all others goods in the economy

Question 41

Barter

Answer 41

Swapping one good for another without the use of money

Question 42

Capital Productivity

Answer 42

Output per unit of capital employed

Question 43

Division of lsbour

Answer 43

Specialisation by workers, who perform different tasks at different stages of production to make a good or service, in co-operation with other workers