micro unit 1

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What is Economics
A social science that studies the economic behaviour of both individuals and groups of people, and the economic relationships between individuals and groups
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Postive statements
A statement that can be scientifically tested to see if its correct/incorrect
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Normative statements
A statement of opinion that includes a value judgement and cannot be scientifically tested
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nature/purpose of econ activity
is the production of goods/services to satisfy people's needs/wants by improving economic welfare
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Key economic decisions
what to produce? how to produce? who is to benefit from the goods/services produced?
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Factors of Production
Land ( = all natural resources) Labour ( = human capital) capital (= stock of goods used to produce other goods/services) enterprise (risk takers who bring other 3 FofP together)
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economic problem
considering there are infinite wants and limited resources, how best to allocate scarce resources amongst competing uses so as to improve & maximise human welfare
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a need for a choice arises when....
an economic agent has to choose between 2 or more alternative, which are mutually exclusive (impossible to have both at same time) involves tradeoff, which creates opportunity cost
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opportunity cost
cost of the next best option, which has been forgone
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economic goods & free goods
economic goods = goods that are scarce and therefore involve opportunity costs free goods = goods which have no opportunity costs e.g. clean air
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PPF (Production Possibility Frontier) curve
depicts the various combinations of 2 products than can be produced when all the available resources are fully & efficiently employed - an economy's maximum productive potential
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Other cards in this set

Card 2

Front

A statement that can be scientifically tested to see if its correct/incorrect

Back

Postive statements

Card 3

Front

A statement of opinion that includes a value judgement and cannot be scientifically tested

Back

Preview of the back of card 3

Card 4

Front

is the production of goods/services to satisfy people's needs/wants by improving economic welfare

Back

Preview of the back of card 4

Card 5

Front

what to produce? how to produce? who is to benefit from the goods/services produced?

Back

Preview of the back of card 5
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