1.1 Economic Methodology and The Economic Problem

  • Created by: Sam19
  • Created on: 02-01-17 13:43
Hypothesis
A proposed explanation for an event
1 of 34
Theory
An hypothesis which has been tested and seems to stand up to that testing. It does not mean it is true but it has not been disproven.
2 of 34
Ceteris Paribus
Leave everything else the same.
3 of 34
Normative Statement
They are opinions or viewpoints and are value judgements. They cannot be tested or proven.
4 of 34
Positive Statement
They can be tested. They are objective and scientific.
5 of 34
Value Judgements
Is a judgement of the rightness or wrongness of something or someone, or the usefulness of something, based on a comparison.
6 of 34
Moral and Political Judgements
People's views concerning the best option are influenced by the positive consequences.
7 of 34
What is the purpose of economic activities?
The production of goods and services to satisfy needs and wants.
8 of 34
What are the 3 basic needs?
Shelter, Warmth, Food & Water.
9 of 34
What do economic systems attempt to solve?
What we should produce, how we should produce it and for whom it should be produced.
10 of 34
Name 3 economic activities:
Trading, Car boot sales, Charity work, DIY, Barter and Illegal trades.
11 of 34
Factors of Production
An economic term to describe the inputs that are used in the production of good &/ services in the attempt to make an economic profit.
12 of 34
Name the 4 factors of production:
Land, Labour, Capital and Entrepreneurship
13 of 34
Land
Natural resources E.G: Sea, Sand and Sun that have been so important for the development of tourism.
14 of 34
Labour
Human resources. Quality and quantity are key considerations.
15 of 34
Capital
Physical resources covering anything that can be regarded as man made aid for production.
16 of 34
Entrepreneurship
Form of human capital. The 3 factors of production combine. It refers to inventiveness and taking risk.
17 of 34
What is the fundamental economic problem?
Despite all our wants and needs there are simply not enough resources to meet these needs. This is scarcity.
18 of 34
What is the economic problem?
There are infinite wants but limited resources.
19 of 34
Opportunity Cost
Next best forgone alternative.
20 of 34
Economic Goods
Are goods that are scarce and therefore they involve an opportunity cost. Nearly all goods are economic goods.
21 of 34
Free goods
Are goods which have no opportunity cost.
22 of 34
Intellectual Idea
If you develop a new invention and don't patent it, anyone can reuse the idea without any opportunity cost.
23 of 34
By Products
If heat is generated from a recycling plant the creates a good: heat at no opportunity cost.
24 of 34
On a PPF what is on the X axis and what is on the Y axis?
X- Services or consumer goods & Y-Goods or capital goods
25 of 34
What does a PPF show?
It links the maximum amount of any two types of product that can be produced from a fixed quantity of resources and existing technological knowledge.
26 of 34
What is it called in you are inside your PPF?
Inefficient
27 of 34
What is it called it you are outside your PPF?
Unattainable
28 of 34
What is it called in you are on your PPF?
Efficient and not allocatively productive
29 of 34
What is allocating efficient?
It is achieved at any point on the PPF because it is not possible to make anyone better of without making someone else worse off.
30 of 34
Capital Goods
Are human made products used in the production of other goods and services E.G: Machines.
31 of 34
Consumer Goods
Are the products bought by consumers for their own use and enjoyment.
32 of 34
How can you shift your PPF?
Increase labour, find new resources, improve efficiency, improved technology, improvement in human capital, better management of resources via division of labour & specialisation and changing attitudes - encouraging entrepreneurship.
33 of 34
Human Capital
Is the increased investment in training, education and good management which motivates staff.
34 of 34

Other cards in this set

Card 2

Front

Theory

Back

An hypothesis which has been tested and seems to stand up to that testing. It does not mean it is true but it has not been disproven.

Card 3

Front

Ceteris Paribus

Back

Preview of the front of card 3

Card 4

Front

Normative Statement

Back

Preview of the front of card 4

Card 5

Front

Positive Statement

Back

Preview of the front of card 5
View more cards

Comments

No comments have yet been made

Similar Economics resources:

See all Economics resources »See all Production and efficiency resources »