Introductory Concepts

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Ceteris Paribus

In order to make predictions in Economics, we

often make the assumption ceteris paribus

which means all other things remain constant.

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Is concerned with the

making of goods.

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Is the using up of goods

and services.

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Is the swapping of goods/service and/or 

money for each other.

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Consumer goods

Are good that are wanted directly

by consumers, they are the end result of

production and manufacturing and are what a

consumer will see on the store shelf. 

Clothing, food, automobiles and jewelry are

all examples of consumer goods. 

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Consumer durables

Are goods that are wanted directly by

consumers and will be used up over a long

period of time

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Capital goods

Are goods that are made

for use by producers.

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Factors of Production

Is the name given to the inputs used in the

production process.

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Is the input that

provides the workforce.

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Inputs which are man

made, eg. machinery.

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Is the inputs which include all

natural resources.

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Is the organiser of the other inputs, they

make all the decisions concerning production

and bear all the risk.

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The basic economic


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When a consumer makes a choice, he will

choose the goods which give him maximum

utility or satisfaction.

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Opportunity Cost

The cost of the next best alternative


Or the cost of the next best alternative one

gives up to consume the good

one chooses.

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