1.1.1 The Economic Problem Flashcards Preview

Edexcel Economics B Theme 1 > 1.1.1 The Economic Problem > Flashcards

Flashcards in 1.1.1 The Economic Problem Deck (11)
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1

Positive Statements

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.

2

Normative Statements

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.

3

Scarce Resources

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.

4

Opportunity Cost

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.

5

Trade-off

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.

6

Factors of production

- 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)

7

Capital Goods

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

8

Consumer goods and services

Goods which satisfy our needs and wants directly.

9

Consumer durables

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

10

Consumer non-durables

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

11

Consumer services

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