Chapter 1 - Economic Problem

Cards (9)

What are positive statements
Objective statements which can be tested by referring to available evidence
What are normative statements
Subjective statements which contain a value judgement (opinions)
Scarcity
A situation which arises due to unlimited wants and limited resources
What are the factors of production
Resources used in the production process, or inputs into production
Examples of the 4 factors of production and their rewards
Capital - Interest
Enterprise - Profit
Land - Rent
Labour - Wages
Opportunity cost
The value of the next best alternative forgone
What is a PPC
A curve showing the maximum combinations of goods and services that can be produced in a set period of time given the available resources
Trade-off
Situation in which the choice of one alternative requires the sacrifice of another
Long run economic growth
An expansion in the productive capacity of the economy