Economics Definitions 0.0 / 5 ? EconomicsMarket FailureASEdexcel Created by: William BallCreated on: 22-09-13 15:56 Positive Statement A statement that can be tested with data and confirmed as either true or false. 1 of 15 Normative Statement A statement that cannot be tested and contains a value judgement. 2 of 15 Opportunity cost The loss of value of the next best alternative forgone 3 of 15 PPF the curve showing the maximum combinations of goods or services that can be produced in a given period with the current level of available resources. 4 of 15 Free Market Economy An economy in which market forces guide the allocation of resources and involved no government control 5 of 15 Centrally Planned / Controlled Economy An economy in which the government entirely undertakes the role of allocating and distributing resources. 6 of 15 Mixed Economy A combination of A free market and centrally planned economy 7 of 15 Factors Of production the 4 factors which affect rate/efficiency of production. Capital, Enterprise, Land and Labour 8 of 15 Sustainable Development development which meets the needs of the present without compromising the ability of future generations to meet their own needs 9 of 15 Economic Growth The expansion of the productive capacity of the economy 10 of 15 Division Of Labour A process in which production is broken down into separate stages and workers are each assigned a particular stage 11 of 15 Gross domestic product (GDP) A measure of the economic activity carried out in an economy over a period 12 of 15 Consumer Surplus The difference between what the consumer is willing to pay compared to what they actually pay 13 of 15 Producer Surplus The difference between what the firms are willing to sell for compared to what they actually sell for 14 of 15 Price Mechanism The system in which the price is determined by the supply/demand for a good, and price will be an incentive to ration goods 15 of 15
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