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15 Cards in this Set
- Front
- Back
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Scarcity
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Where demand exceeds supply
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Factor of production
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A productive resource
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Capital
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Man-made aids to production
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Entrepreneurship
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Risk taking role undertaken by owners of a business as they combine other FoPs in pursuit of profit
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Investment
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Spending by firms on new capital stock or repair of existing stock
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Depreciation
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The rate at which capital looses value over time
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Opportunity cost
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The value of the next best alternative foregone
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Production possibility frontier
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All combinations of total output which an economy is capable of producing using all its resources in the most efficient way
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Productive efficiency
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Where production in an economy occurs when all factors of production are fully utilised and producing output with the minimum of factor inputs currently feasable
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Allocative efficiency
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Where production of output matches what is demanded by households and firms
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Positive economics
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The study of propositions which can be verified (proved or disproved) by data from the real world
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Normative economics
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The study of propositions which cannot be verified (proved/disproved) by data from the real world and require value judgements
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Specalisation
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Where a FoP is devoted to a specific job in the production process
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Division of labour
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Where labour specialises in the performance of a particular part of the production process
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Unit cost (average cost)
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Cost per unit of output
AC = total cost/output |
