Economic methodology and the economic problem

HideShow resource information
Natural science
Objects, phenomena or laws of the nature and the physical world e.g physics,biology,chemistry
1 of 19
Social science
Study of human society and of individuals relationship in and to society. e.g. economics , business, psychology.
2 of 19
Hard/soft theories
HARD = ALWAYS APPLY , SOFT = SHOULD APPLY BUT MAY BE EXCEPTIONS
3 of 19
Positive Statement
A statement that can be proven to be true or false. It contains statistics and facts.
4 of 19
Normative statement
Based on opinion and value judgements. Cannot be proven to be right or wrong.
5 of 19
What are economic decisions influenced by ?
Value, moral and political judgements.
6 of 19
ECONOMIC PROBLEM
SCARCE RESOURCES: limited income, limited time , limited natural resources
7 of 19
Opportunity cost
The cost of giving up the best next alternative.
8 of 19
Factors of production and their returns
LAND=RENT, LABOUR=WAGES, CAPITAL=INTEREST , ENTERPRISE=PROFIT
9 of 19
Capital/producer goods
Used to make other goods and services
10 of 19
Consumer goods
Consumed by individuals to satisfy their own needs and wants.
11 of 19
Planned economy
The government decides on the production of goods and services.
12 of 19
Free-market economy
the market decides what is being producing based on demand and supply.
13 of 19
Mixed economy
goods and services generally provided by the market except when the government decided to intervene to prevent market failure e.g. NHS and education
14 of 19
Economic growth
Increase in the capacity of an economy and enable them to produce more goods and services.
15 of 19
Causes of an increase in PPF
Higher productivity/efficiency, better management, increase in investment, discovery and extraction of new natural resources, innovation and invention of new products.
16 of 19
Causes of a decrease in PPF
Natural distasters, war, political instability, disease,outward migration, decline in productivity perhaps created by recession leading to lower investment.
17 of 19
Productive efficiency
Producing at the minimum average cost producing the maximum possible output from units.
18 of 19
Allocative efficiency
Resources are being used to produce what consumers want. AR=MC
19 of 19

Other cards in this set

Card 2

Front

Social science

Back

Study of human society and of individuals relationship in and to society. e.g. economics , business, psychology.

Card 3

Front

Hard/soft theories

Back

Preview of the front of card 3

Card 4

Front

Positive Statement

Back

Preview of the front of card 4

Card 5

Front

Normative 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 Economic methodology and the economic problem resources »