This occurs when the available economic resources are used to produce the combination of goods and services that best matches peoples’ tastes and preferences.
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Division of labour
The specialisation of individuals through the separation of tasks in the production process and their allocation to different groups of workers.
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Factors of production
Inputs into the production process namely land, labour, capital and enterprise.
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Normative statement
A statement that includes a value judgement, is subjective and therefore cannot be refuted just by looking at the evidence.
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Opportunity cost
The next best alternative foregone whenever an economic decision is made. It is also the gradient of the PPF.
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Positive statement
A statement which is value free, objective and can be empirically tested to see whether or not it is correct.
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Productive efficiency
This occurs when it is impossible for an economy to produce more of one good without producing less of another. The economy would be operating somewhere on its PPF.
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Production
A process, or set of processes, that converts inputs (factors of production) into outputs (goods or services).
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Production possibility frontier (PPF) or Production possibility boundary (PPB)
A curve showing the alternative combinations of two goods (or types of good) than an economy can produce when all the available resources are fully and efficiently employed.
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Productivity
Output per unit of input per time period.
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Scarcity
Linked to the fundamental economic problem scarcity is the result of finite resources in the economy being unable to produce enough goods and services to fulfil society’s infinite wants.
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Specialisation
This occurs when an economic agent chooses to concentrate on producing a particular good or service and then trades with others in order to survive.
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Other cards in this set
Card 2
Front
The specialisation of individuals through the separation of tasks in the production process and their allocation to different groups of workers.
Back
Division of labour
Card 3
Front
Inputs into the production process namely land, labour, capital and enterprise.
Back
Card 4
Front
A statement that includes a value judgement, is subjective and therefore cannot be refuted just by looking at the evidence.
Back
Card 5
Front
The next best alternative foregone whenever an economic decision is made. It is also the gradient of the PPF.
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