THEME 1 Flashcards
what is a positive statement
- a statement which is objective and made without any obvious judgement / emotions
- can be tested to be proven or disproven
- eg warm weather will lead to an increase in ice cream sales
what is a normative statement
- a statement which is subjective and based on opinion
- cannot be proven or disproven
- often includes words such as maybe or should or says one thing is better than another
- eg the government should raise taxes
what is the basic problem of economics
there is unlimited wants and finite resources
how do economists try to solve the basic economic problem?
by working out what to produce, how to produce it and for who production should take place
what is a renewable resource
a resource that can be replenished or replaced
eg oxygen, solar power and fish
what is a non renewable resource
a resource which cannot be replaced by natural
eg coal, oil, gas ( fossil fuels )
what is the opportunity cost
the cost of one thing in terms of the next best option which has been given up
what are the 4 economic agents
- consumer
- producers
- government
- ?
what are the 4 factors of production
- land
- labour
- capital
- entrepreneurship
what is land in the factors of production
- all natural resources
- owners recieve rent from land or money from the sale of land
what is labour in the factors of production
- productive human effort both physical and menatl, paid or unpaid
- labourers recieve wages
what is capital in the factors of production
- all man made reesources used to produce goods or services
- owners recieve intrest on their land
what is entrepreneur in the factors of production
- the willingness and ability to take risks to make a product or service
- successful entrepreneurs earn a profit from their activities
what does PPF stand for
- production possibility frontiers
what does PPF show
the maximum possible combinations of capital and consumer goods that the economy can produce with its current resources and technology
