KEY TERMS/ DEFINITIONS🕰️🧸

Question 1

What is the Basic Economic Problem?

Answer 1

That individuals have infinite wants but there are scarce resource. As such, we need to allocate these resources in the most efficient way possible.

Question 2

What does Ceteris Paribus mean?

Answer 2

All other things being equal.

Question 3

What is a Positive Statement?

Answer 3

A value free statement that can be tested true or false in using economic data.

Question 4

What is a Normative Statement?

Answer 4

A value judgement that can not be tested true or false using economic data.

Question 5

What is an Opportunity Cost?

Answer 5

The value of the next best alternative forgone.

Question 6

What is a Production Possibility Frontier (PPF)?

Answer 6

A graph illustrating the maximum potential output that an economy can produce between 2 goods when all its factors of production are efficiently employed.

Question 7

What is Specialisation?

Answer 7

When an individual, firm or country produce a limited range of goods & become experts at it.

Question 8

What is the Division of Labour?

Answer 8

A form of specialised labour in which the production process is broken down into specific roles & each unit of workers specialise in it.

Question 9

What is Globalisation?

Answer 9

The closer intergration of the world’s economies. It is characterised by an increase in trade as a percentage of global trade.