Economics Unit 1 MAIN

• centeris paribus


  all things being equal; the assumption that, while the effects of a change in one variable are being investigated, all other variables are kept constant
• disposable income


  the amount of money you have left to spend after you have paid your taxes, bills etc.
• empirical


  based on scientific testing or practical experience, not on ideas
• good


  a thing that is produced in order to be sold
• hypothesis


  an idea that is suggested as an explanation for something, but that has not yet been proved to be true
• inequality


  an unfair situation, in which some groups in society have more money, opportunities, or power than others
• law


  a theory or model that has been verified by empirical evidence
• normative economics

  the study and presentation of policy prescriptions involving value judgements about the way in which scarce resources are allocated
• normative statements

  statements that cannot be supported or refuted because it is a value judgement
• positive economics

  the scientific or objective study of the allocation of resources
• positive statements


  statements that can be supported or refuted by evidence
• scientific method


  a method that subjects theories or hypotheses to being disproved by empirical evidence
• social science

  the study of societies and human behaviour using a variety of methods, including the scientific method
• theory or model


  a hypothesis that is capable of being refuted by empirical evidence
• basic economic problem


  resources have to be allocated between competing uses because wants are infinite but resources are scarce
• capital


  as a factor of production is the stock of manufactured resources used in the production of goods and services
• choice


  Economic choices involve the alternative uses of scarce resources
• economic goods


  goods that are scarce because their use has an opportunity cost
• entrepreneurship

  a factor of production, the seeking out of profitable opportunities for production and taking risks in attempting to exploit these
• entrepreneurs


  individuals who seek out profitable opportunities for production and take risks in attempting to exploit these
• factors of production


  the inputs to the production process: land, labour, capital and enterprise or entrepreneurship
• fixed capital


  economic resources, such as factories and hospitals, that are used to transform working capital into goods and services
• free goods


  goods that are unlimited in supply and therefore have no opportunity cost
• human capital


  the value of the productive potential of an individual or group of workers; made up of the skills, talents, education and training of an individual or group and represents the value of future earnings and production
• labour


  a factor of production, the workforce
• land


  a factor of production, all natural resources
• needs


  the minimum that is necessary for a person to survive as a human being
• non-renewable resources


  resources, such as coal or oil, which once exploited cannot be replaced
• non-sustainable resources


  a resource which that can be economically exploited in such as a way that its stock is being reduced over time
• opportunity cost


  the benefits of the next best alternative that are given up
• renewable resources


  resources, such as fish stocks or forests, that can be exploited over and over again because they have the potential to renew themselves
• scarce resources


  resources that are limited in supply so that choices have to be made about their use
• wants


  desires for the consumption of goods and services
• working capital


  resources that are in the production system waiting to be transformed into goods or other materials before being finally sold to the consumer
• allocatively Efficient


  occurs when social welfare is maximised, the distribution of resources is such that it is not possible to redistribute them without making someone worse off
• capital goods


  goods that are used in the production of other goods, such as factories, offices, roads, machines and equipment
• consumer goods


  goods and services that are used by people to satisfy their needs and wants
• margin


  a point of possible change
• production possibility frontier


  a curve that shows the maximum potential level of output of one good given a level of output for all others goods in the economy
• barter


  swapping one good for another without the use of money