Economics - Unit 1

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Goods and Services
Goods are considered to be tangible products that we can touch such as CD's or a car. These are distinct from services, which are not tangible (touchable) such as a trip to the cinema or a train journey.
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Economic welfare
Refers to the benefit or satisfaction an individual or society gets from the allocation ofresources. We can attempt to measure the welfare of individuals but really we want to understand the effects on society as a whole.
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Oppotunity cost
The next best alternative forgone (given up) when an economic decision is made. Note: it is only the next best alternative not a range of alternatives.
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Economic goods
Goods that are scarce and therefore have an opportunity cost.
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Free goods
Goods that have no opportunity cost for example air.
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Factor market
The market for the factors of production that make other goods andservices such as labour or raw materials.
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Renewable resources
Resources that are able to be replenished over time, whereas non-renewable such as oil and gas are likely to run out.
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Profit
When total income or revenue for a firm is greater than total costs.
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Free market economy
One in which there is very limited government involvement in providing goods and services. Its main role is to ensure that the rules of the market are fair so that, e.g. people cannot steal each other's property.
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Production Possibility Boundary
The PBB indicates the maximum possible output that can be achieved given a fixed set of resources and technology in a particular time period.
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Productive efficiency
When a firm operates at minimum average total cost, producing the maximum possible outcome from inputs into the production process.
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Allocative efficiency
This is achieved in an economy when it is not possibe to make anyone better off without making someone worse off, or you cannot produce more of one good without making less of another.
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Productivity
A measure of efficiency, measuring the ratio of inputs to outputs; the most common measure is labour productivity, which is the output per worker.
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Human capital
The skills, abilities, motivation and knowledge of labour. Improvements in human capital raise pro
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Division of labour
Breaking the production process down into a sequence of tasks, with workers assigned to particular tasks.
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Specialisation
The production of a limited range of goods by an individual factor of production or firm or country, in cooperation with others so that together a complete range of goods is produced.
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Value judgements
Statements or opinions expressed that are not testable or cannot be verified and depend very much on the views of the individual and the values they hold.
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Normative statements
Opinions that equire value judgements to be made.
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Positive statements
Statements that can be tested against real-world data.
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Other cards in this set

Card 2

Front

Economic welfare

Back

Refers to the benefit or satisfaction an individual or society gets from the allocation ofresources. We can attempt to measure the welfare of individuals but really we want to understand the effects on society as a whole.

Card 3

Front

Oppotunity cost

Back

Preview of the front of card 3

Card 4

Front

Economic goods

Back

Preview of the front of card 4

Card 5

Front

Free goods

Back

Preview of the front of card 5
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