Introduction to Economics (Definitions)

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  • Created by: Amalie
  • Created on: 13-03-13 10:29
Microeconomics
The study of the behaviour of individual consumers, firms, and industries and the determination of market prices and quantities of goods, services, and factors of production.
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Macroeconomics
The study of aggregate economic activity. It investigates how the economy as a whole works.
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Ceteris Paribus
all other things being held equal.
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Positive Economics
Matters of economics that can be proven right or wrong by looking at the facts.
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Normative Economics
Matters of economics that are based upon opinion, and so are incapable of being proven to be right or wrong.
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Scarcity
The limited availability of economics resources relative to society's unlimited demand for goods and services.
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Land
The physical factor of production. It consists of natural resources, some of which are renewable and some which are non-renewable.
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Labour
The human factor of production. It is the physical and mental contribution of the existing work force to production.
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Capital
The factor of production that comes from investment in physical and human capital. Physical capital is the stock of manufactured resources and human capital is the value of the workforce.
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Entrepreneurship
The factor of production involving organisation and risk-taking.
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Opportunity Cost
The next best alternative foregone when an economic decision is made.
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Free Good
Goods or services which are unlimited in supply and have no opportunity cost. A free good has an unlimited supply at market price zero.
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Economic Good
Goods or services which are relatively scarce and so have a price. An opportunity cost is involved if it is consumed.
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Utility
The satisfaction or pleasure that an individual derives from the consumption of a good or service.
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Production Possibilities Curve/ Frontier
Shows the maximum combinations of goods or services that can be produced in an economy in a given time period, if all the resources in the economy are being used fully an efficiently and the state of technology is fixed.
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Actual Output
The actual production of goods and services in an economy in a given time period.
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Actual Growth
This occurs when previously unemployed factors of production are brought in to use. It is represented by a movement from a point within a PPC to a new point nearer to the PPC.
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Potential Output
The possible production that would be possible in an economy if all available factors were being employed.
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Potential Growth
This occurs when the quantity and/or quality of factors of production within an economy is increased. It is represented by an outward shift of the PPC.
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Economic Growth
The growth of real output in an economy over time, usually measured as growth in real GDP.
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Economic Development
It is an a broad concept involving improvement in standards of living, reduction in poverty, improved health and education.
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Sustainable Development
Development that meets the needs of the present without compromising the ability of future generations to meet their own needs.
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Free Market Economy (market economy)
An economy where the means of production are privately held by individuals and firms. Demand and supply determine how much to produce, how/how many to produce, and for whom to produce.
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Planned Economy (command economy)
An economy where the means of production are collectively owned (except labour). The state determines how much to produce, how/how many to produce, and for whom to produce.
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Transition Economy
An economy in the process of moving from a centrally planned economy to a more market-oriented economic system.
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Card 2

Front

The study of aggregate economic activity. It investigates how the economy as a whole works.

Back

Macroeconomics

Card 3

Front

all other things being held equal.

Back

Preview of the back of card 3

Card 4

Front

Matters of economics that can be proven right or wrong by looking at the facts.

Back

Preview of the back of card 4

Card 5

Front

Matters of economics that are based upon opinion, and so are incapable of being proven to be right or wrong.

Back

Preview of the back of card 5
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