Vocab

• Model


  A simplified representation of reality used to provide insight into economic decisions and events
• Ceteris Paribus

  Latin phrase meaning ‘other things being equal’; it is used in economics when we focus on changes in one variable while holding other influences constant
• Microeconomics

  The study of economic decisions taken by individual economic agents, including households and firms
• Macro economics

  The study of the interrelationships between economic variables at an aggregate (economic- wide) level
• Positive statement

  A statement about what is (i.e. about facts)
• Normative statement

  A statement that involves a value judgement about what ought to be
• Value judgement

  An evaluative statement of how good or bad you think an idea or action is.
• Economic agent

  Organisations or individuals that impact the economy by their actions i.e. households, individuals, businesses, governments, and central banks.
• Economic welfare

  The level of prosperity and standard of living of either an individual or a group of persons
• Economic needs

  Things that are essential for human survival
• economic wants

  Something you desire but is not essential
• Basic economic problem (BEP)

  The scarcity of resources in relation to the unlimited wants and needs of individuals and society
• Economic goods

  useful to people but scarce in relation to its demand so that human effort is required to obtain it
• Free goods

  Naturally in abundant supply and need no conscious effort to obtain them
• Renewable resources

  Natural resources that can be replenished, such as forest that can be planted, or solar energy that does not get used up.
• Non-renewable resources


  Natural resources that once used cannot be replenished, such as coal or oil
• Sustainable resources

  Renewable resources which are being economically exploited in a way which insures that they will not run out and will therefore be available for future generations
• Opportunity cost

  In decision-making, the value of the next best alternative forgone
• Scarcity

  The situation that arises when people have unlimited wants in the face of limited resources