Microeconomics definitions - Economic Methodology

• Positive statement 


  Can be scientifically tested against fact to see if it it true or false
• Normative statement 


  Includes a value judgement and cannot be scientifically tested against facts
• Opportunity cost 


  Measures the cost of a choice made in terms of the next best alternative forgone or sacrificed
• Need 


  Something that is necessary for human survival
• Want 


  Something that is desirable
• Economic welfare 


  The Economic wellbeing of an individual, group or an economy
• Factor inputs 


  They are inputs that create outputs of goods or services for sale in markets
• Factor rewards 


  Describes the income that flow to each of the factors of input
• Free market economies 


  There is limited role for state, the private sector dominates
• Mixed economies 


  Mix of state and private ownership. The government has some intervention in the market
• Command economies 


  Limited role for the private sector. The state allocates resources
• Capital goods 


  Used to produce consumer goods and services
• Consumer durables 


  Products that give satisfaction throughout its life
• Consumer non-durables 


  Products that give satisfaction as soon as they are used
• Consumer services 


  Products or actions that are typically produced and consumed simultaneously