Microeconomics Chapter 1 - Key Terms

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Scarcity
A situation that arises because people have unlimited wants in the face of limited resources
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Opportunity Cost
In decision making, the value of the next best alternative forgone
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Factors of Production
Resources used in the production process; inputs into production, including labour, land, capital and entrepreneurship
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Model
A simplified representation of reality used to provide insight into economic decisions and events
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Production Possibility Curve (PPC)
A curve showing the maximum combinations of goods or services that can be produced in a set period of time given available resources
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Economic Growth
An expansion in the productive capacity of the economy
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Gross Domestic Product (GDP)
A measure of the economic activity carried out in an economy during a period
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Division of Labour
A process whereby the production procedure is broken into a sequence of stages, and workers are assigned to particular stages
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Market
A set of arrangements that allows transactions to take place
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Microeconomics
The study of economic decisions taken by individual economic agents, including households and firms
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Macroeconomics
The study of the interrelationships between economic variables at an aggregate (economy-wide) level
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Positive Statement
A statement about what "is", i.e., facts
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Normative Statement
A statement involving a value judgement that is about what ought to be
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Specialisation
A method of production where a business, area or economy focuses on the production of a limited scope of products or services to gain greater degrees of productive efficiency within an overall system
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Other cards in this set

Card 2

Front

In decision making, the value of the next best alternative forgone

Back

Opportunity Cost

Card 3

Front

Resources used in the production process; inputs into production, including labour, land, capital and entrepreneurship

Back

Preview of the back of card 3

Card 4

Front

A simplified representation of reality used to provide insight into economic decisions and events

Back

Preview of the back of card 4

Card 5

Front

A curve showing the maximum combinations of goods or services that can be produced in a set period of time given available resources

Back

Preview of the back of card 5
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