1.1.1 The Economic Problem Flashcards

1
Q

Positive Statements

A

Positive statements are objective (based on facts) statements that can be tested, amended or rejected by referring to the available evidence. For e.g. A fall in incomes will lead to a rise in demand for own-label supermarket foods.

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2
Q

Normative Statements

A

A value judgement is a subjective (opinion) statement of opinion rather than a fact that can be tested by looking at the available evidence. For e.g. Pollution is the most serious economic problem.

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3
Q

Scarce Resources

A

A resource with an available quantity less than its desired use. Scarce resources are the workers, equipment, raw materials, and organisers used to produce scarce goods.

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4
Q

Opportunity Cost

A

The loss of other alternatives when one alternative is chosen. For e.g. you spend time and money going to a movie, you cannot spend that time at home reading a book, and you can’t spend the money on something else.

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5
Q

Trade-off

A

The balance between two desirable outcomes, where both are not achievable. A trade-off arises where having more of one thing potentially results in having less of another.

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6
Q

Factors of production

A
  • Land (natural resources available for production eg. Rental income to owners of land)
  • Labour (eg. Wages and salaries, it’s the human input into the production process)
  • Enterprise (entrepreneurs organise factors of production and take risks eg. Profits)
  • Capital (Goods used in the supply of other products e.g interest from savings + dividends for shares)
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7
Q

Capital Goods

A

Goods used to make consumer goods and services. Capital Inputs include fixed plant and machinery, hardware, software etc.

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8
Q

Consumer goods and services

A

Goods which satisfy our needs and wants directly.

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9
Q

Consumer durables

A

Products that provide a steady flow of satisfaction / utility over their working life (eg. A washing machine or using a smartphone)

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10
Q

Consumer non-durables

A

Products that are used up in the act of consumption eg. Drinking a coffee or turning on the heating

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11
Q

Consumer services

A

Eg. Hair cuts or a ticket to a show/gig

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