Nature of Economics Definitions

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  • Created by: isabravo
  • Created on: 03-03-21 10:29
ceteris paribus
all other things equal
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scarcity
the limited availability of a commodity
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positive statement
can be proven true/false
"A fall in supply of petrol will lead to an increase in its price"
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normative statement
value judgements "should/oughts", opinions, ideas
"Working citizens should not pay for hospital care."
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renewable resource
can be exploited over and over again because they have the potential tor renew themselves
Eg forests, fish stocks
(not scarce)
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nonrenewable resource
once exported cannot be replaced
Eg coal, oil
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the economic problem
scarcity + choice
resources have to be allocated between competing uses because wants are infinite whilst resources are scarce, forcing economic agents to make a choice
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opportunity cost
every choice has a range of alternatives
the opportunity cost is the benefits forgone of the choice - a trade-off, sacrifice
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PPF
Production Possibility Frontier : a curve showing the maximum potential output of an economy
movement along = change in choice...
shift= expansion/contraction of the production possibility of an economy
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capital goods
goods used in production of other goods Eg factories, offices, roads
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consumer goods
goods/services used by people to satisfy their needs /wants
eg food, holidays
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specialisation
a particular area where someone concentrates in, becomes an expert
pros :saves time, more efficient = increase in productivity, allows workers to gain skill

cons: work can become robotic, repetitive , can feel alienated = less efficient , poorer qualit
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division of labour
specialisation between individuals - performing different tasks at different stages of production to make a good/service
e.g working with others, a team
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Specialisation & the division of labour
Adam Smith
breaks down large jobs into smaller jobs that are assigned to workers.
The division of labour creates a specialized knowledge of a task, saves labor time and increase productivity.
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Functions of money - medium of exchange
directly swapping one good with another
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a measure of value
unit of account
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a method of deferred payment
people will lend money because they know they will roughly be able to buy the same amount of goods when its paid back
eg trade confidence
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free market
market mechanism economies - limited government intervention
eg capitalist economies, Hong Kong is one of the freest market economies
Adam Smith, Friedrich Hayek
pros: individuals have more choice, stronger incentives to innovate, produce higher quality
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mixed economics
both the market mechanism & government planning process allocate significant proportions of total resources
role of government - buying land, labor, and capital purchase goods and services in the product market.
Eg Uk - healthcare system administered &f
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command economies
government controls the means of production, allocates resources in society
Eg North Korea, China
Karl Marx
pros: less inequality, low unemployment, common good vs profit priority
cons: lack of competition inhibits innovation, inefficiency, curbed po
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Other cards in this set

Card 2

Front

the limited availability of a commodity

Back

scarcity

Card 3

Front

can be proven true/false
"A fall in supply of petrol will lead to an increase in its price"

Back

Preview of the back of card 3

Card 4

Front

value judgements "should/oughts", opinions, ideas
"Working citizens should not pay for hospital care."

Back

Preview of the back of card 4

Card 5

Front

can be exploited over and over again because they have the potential tor renew themselves
Eg forests, fish stocks
(not scarce)

Back

Preview of the back of card 5
View more cards

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