Basic Economic Concepts

Front 1

Economics

Back 1

Economics is the study of how man allocates scarce resources, which have alternative uses to achieve given or goals

Hint 1

Define

Front 2

Define the term economy

Back 2

The economy is the mechanism through which these scarce resources are organized for the production of goods and services

Front 3

Sectors in an economy

Back 3

Households, firms and government

Front 4

What's the basic economic problem

Back 4

Mans wants are unlimited, where as economic resources are limited. This means there are not enough resources to produce all the goods and services desired.

Hint 4

The imbalance between unlimited wants and limited resources

Front 5

Scarcity

Back 5

Scarcity is the economic condition where all goods and services are not sufficient for those who desire them.

Front 6

Choice

Back 6

Choice is the range of options available to the individual, firms are or government when making a decision

Front 7

Opportunity cost

Back 7

Opportunity cost is the cost of the alternative forgone

Front 8

Money cost

Back 8

This involves what was actually paid for the inputs used to produce a given good or service

Front 9

The production possibility frontier

Back 9

A graph showing the various combination of two goods that an economy is able to produce with fixed resources

Front 10

The ppf assumes

Back 10

The economy only produces teo goods. The amt of resources is fixed. Each of the goods can be produced using changing ratios of the factors of production

Front 11

A shift in the ppc outwards

Back 11

Is caused by economic growth, discovery of new natural resources, growth in population, technological progress and improvements in labour productivity.

Front 12

A pivot in the ppf

Back 12

Assume that industry for one good uses a labour intensive industry and the industry for the other good uses a capital intensive industry. There is an improvement in technology and this benefits the capital intensive industry more than the labor intensive industry.

Front 13

Back 13

Front 14

Normative statement

Back 14

Involves an opinion or valued judgment

Front 15

Positive statement

Back 15

Can be verified

Front 16

Subsidies

Back 16

Government grants to suppliers of goods and services.

Hint 16

may be intended to keep prices down

Front 17

Capital good

Back 17

Goes into the production of other goods example goods and raw materials

Front 18

Consumer goods

Back 18

One which satisfies a person's immediate needs