PPF DIAGRAM SPECIALISATION ETC Flashcards
(40 cards)
social science meaning
a group of academic disciplines that examine society and see how they interact and develop as a culture
- why do people react in different ways?
- why’s it impossible to conduct experiments in eco?
- why do people react differently?
they are not homogenous
impossible to conduct experiments known as behavioral economics
people react differently due to selection and observational bias
what is economic model
simplified representation of reality that is used to provide an insight into economic decisions and events
what is ceterus paribus
we focus on changes in one variable whilst all other influences are kept constant
what is positive statement
what is normative statement
mcqs can test you on the differences between
positive statement is a objective/no judgement. Can be tested with evidence (will, has, done)
normative statement is value judgment cannot be tested with evidence is a opinion (should, ought)
governments use value judgements for
policy decisions
why do policymakers use value judgements
wide range of decisions so not all can be tested so policy makers use value judgements to make policy decisions.
what is the economic problem
scarce resources and unlimited needs and wants
factors of production + explain
CELL
CAPTIAL- manufactured stock of stools, machines etc. used in the production of goods and services
ENTERPRISE-skills entrepreneurs have and the risk they are willing to take
LAND-not just physical land but sea, underground and air
LABOUR-set of skills and training the economy’s workforce has.
non-renewable resources meaning
resources that will never be replaced once used
e.g. coal, copper, oil
renewable resources meaning
resources that can be replaced once used
e.g. solar power, wind power
scarcity meaning
resources are limited in supply so cannot fulfill unlimited human needs and wants
what is opportunity cost
value of the next best alternative foregone
what are goods that have no opportunity cost called
free goods e.g. the air we breathe (unless we pollute it significantly)
what are goods that are scare with opportunity cost called
economic goods
what is production possibility frontier PPF
economic model maximum combination of goods and services produced in a given time with resources being allocated efficiently.
what are consumer goods
goods that are used by people to satisfy their needs and wants such as: houses, TV
what are capital goods
goods that are used in the production of other goods e.g. machines, factories, infrastructure
points on the ppf can be …
points within the ppf can be…
moving towards ppf …
any points outside the ppf…
fully employed or economically efficient
points within ppf are inefficient or unemployed
economy is increasing to fully employed
points outside unfeasible or unobtainable
unless economic growth where sacrificing living standards in the short run
opportunity cost inside ppf ?
no
opportunity cost ON the PPF
yes OC on ppf
it is not possible to increase the output of one good without increasing the output of the other good
opportunity cost on straight line
straight line ppf can suggest
constant
straight line ppf can suggest individual worker
what happens if the ppf shifts outwards
ppf shifts outwards there is an increase in the quality or quantity of the factors of production hence economic growth
to move along the ppf…
reallocation of resources
e.g. because governments want to increase the welfare of their citizens.