A simplified representation of reality used to provide insight into economic decisions and events.
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Ceteris Paribus
a Latin phrase meaning "other things being equal"; it is used in economics when we focus on changes in one variable while holding other influences constant.
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Positive Statement
A statement about what is (i.e. about facts).
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Normative Statement
A statement that involves a valuse judgement about what ought to be.
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Scarcity
A situation that arises when people have unlimited wants in the face of limited resources.
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Oppotunity Costs
In decision making, the value of the next best alternative forgone.
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Marginal analysis
An approach to economic decsision making based on considering the additional (marginal) benefits and costs of a change in behaviour.
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Factors of production
Resources used in the production process; inputs into production, particularly including labour, capital, land and entrepreneurship.
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Renewable resources
Natural resources that once used cannot be replenished, such as coal or oil.
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non-renewable resources
nautral resources that once used cannot be replenished, such as coal and oil.
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Production Possiblity Frontier (PPF)
A curve showing the maximum combinations of goods or services that can be produced in a given period with avaliable resources.
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Potential economic growth
An exspansion 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 over a period of time.
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Division of labour
A process whereby the production procedure is broken down into a sequence of stages, and workers are assigned to a particular stage.
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Market
A set of arrangements that allows transactions to take place
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Market economy
An economy in which market forces are allowed to guide the allocation of resources.
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Command Economy
An economy in which decisions on resource allocation are guided by the state.
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Mixed economy
An economy in which resources are allocated partly through price signals and partly on the basis of intervention by the state.
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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 level.
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Other cards in this set
Card 2
Front
a Latin phrase meaning "other things being equal"; it is used in economics when we focus on changes in one variable while holding other influences constant.
Back
Ceteris Paribus
Card 3
Front
A statement about what is (i.e. about facts).
Back
Card 4
Front
A statement that involves a valuse judgement about what ought to be.
Back
Card 5
Front
A situation that arises when people have unlimited wants in the face of limited resources.
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