Definitions

• What are capital goods?

  Goods used in the production of other goods, like factories and machines.
• What are consumer goods?

  Goods and services used by people to satisfy their needs and wants.
• What does the term 'margin' refer to in economics?

  A point of possible change.
• What is a production possibility frontier?

  A curve showing the maximum potential output of one good given the output of others.
• What is the basic economic problem?

  Resources must be allocated between competing uses due to scarcity.
• What is capital in the context of production?

  The stock of manufactured resources used in the production of goods and services.
• What does 'choice' mean in economics?

  Involves alternative uses of scarce resources.
• What are economic goods?

  Goods that are scarce because their use has an opportunity cost.
• Who are entrepreneurs?

  Individuals who seek profitable opportunities for production and take risks.
• What is enterprise or entrepreneurship?

  The seeking out of profitable opportunities for production and taking risks.
• What are the factors of production?

  Inputs to the production process: land, labour, capital, and enterprise.
• What is fixed capital?

  Economic resources like factories used to transform working capital into goods.
• What are free goods?

  Goods that are unlimited in supply and have no opportunity cost.
• What is human capital?

  The value of the productive potential of individuals, including skills and education.
• What does 'labour' refer to in economics?

  The workforce as a factor of production.
• What is 'land' in the context of production?

  All natural resources used in the production process.
• What are needs in economics?

  The minimum necessary for a person to survive.
• What are non-renewable resources?

  Resources that cannot be replaced once exploited, like coal or oil.
• What is a non-sustainable resource?

  A resource whose stock is being reduced over time through exploitation.
• What is opportunity cost?

  The benefits forgone of the next best alternative.
• What are renewable resources?

  Resources that can be exploited repeatedly because they renew themselves.
• What is a sustainable resource?

  A renewable resource being exploited in a way that it will not diminish.
• What are wants in economics?

  Desires for the consumption of goods and services.
• What is working or circulating capital?

  Resources in the production system waiting to be transformed into goods.
• What does 'ceteris paribus' mean?

  All things being equal; other variables are kept constant.
• What is a law in economics?

  A theory or model verified by empirical evidence.
• What is normative economics?

  The study of policy prescriptions involving value judgments.
• What is a normative statement?

  A statement that cannot be supported or refuted because it is a value judgment.
• What is positive economics?

  The scientific study of the allocation of resources.
• What is a positive statement?

  A statement that can be supported or refuted by evidence.
• What is the scientific method?

  A method that subjects theories to falsification by empirical evidence.
• What is social science?

  The study of societies and human behavior using various methods.
• What is a theory or model in economics?

  A hypothesis capable of refutation by empirical evidence.
• What is barter?

  Swapping one good for another without using money.
• What is capital productivity?

  Output per unit of capital employed.
• What is division of labour?

  Specialization by workers performing different tasks at different production stages.
• What is labour productivity?

  Output per worker.
• What is a market?

  A set of arrangements for buyers and sellers to exchange goods and services.
• What is money?

  Any item that serves as a medium of exchange, measure of value, store of value, and method of deferred payment.
• What are money substitutes?

  Items used as a medium of exchange but not stores of value, like credit cards.