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Introd to Economics
| Term | Definition |
|---|---|
| Economics | Is a social science which studies the allocation of scarce resources which have alternative uses. |
| Scarcity | Means that while the supply of resources(FOPs) are limited, the demand for these is unlimited(unlimited wants/ limited resources) hence society must choose on the use to which the resources are put. Making choices involves opportunity cost. |
| Need | Is immediate e.g. food and shelter, which we need to survive |
| Want | Is anything in excess of needs which is not necessary for our survival, e.g. a foreign holiday or a new car. |
| Opportunity Cost | Is the cost of foregone alternatives. |
| Deductive | Is a method used to solve a theory where you begin with hypotheses that we believe are true, apply a situation to this statement and arrive at the conclusion that'll be accurate assuming the original situation is true. |
| Inductive | Is a method used to solve a theory where a researcher collects data, looks for a pattern and from this, a conclusion is drawn, which becomes an economic law. |
| Economic Laws | These laws are statements that under certain conditions, certain people will behave in certain way. They do not apply to everyone. |
| Land | Anything provided by nature used in the production of goods and services which creates wealth. E.g. Sea, fields. |
| Labour | Any human effort used in the production of goods and services which creates wealth, e.g. A plumber, teacher. |
| Capital | Anything man-made used in the production of goods and services which creates wealth. E.g. Machinery, computers. |
| Enterprise | The factor of production which combines all the other factors of production and takes the initiative and bears the risk invoked in setting up a business to produce goods in the hope of making a profit. |
| Market | Is where buyers and sellers meet. It can be a physical place e.g. Car boot sale, or virtual, like eBay. |
| Factor Market | Are markets in which the factors of production are bought and sold, e.g. Young people employed to pick oranges off trees at 5c per orange. |
| Intermediate Markets | Deal with party finished goods, e.g. The business owner who employs the young people sells the oranges to a juicing company for 10c per orange. |
| Final Markets | The buying and selling of finished goods takes place in final markets, e.g. The juicing company compresses the orange juice into cartons and sells it for €1.50 per litre in its own shop. |
| Free Enterprise economy | Where private business people make the decisions on the goods and services to be produced. E.g. USA |
| Centrally Planned economy | Where the government makes the decisions on the good and services to be produced. E.g. China |
| Mixed economy | One that incorporates elements of both centrally planning and private enterprise in its economic systems. E.g. Ireland. |
| Income | Is the flow of wealth because it is received regularly for providing a factor of production. |
| Wealth | Is the total values of all assets owned by an individual or group of people. |
| Welfare | Is the overall condition of well-being of an individual or group of people. |
| Microeconomics | Studies how an individual producer and a consumer makes decisions and attempt to solve this economic problems. |
| Macroeconomics | Deals with aggregates (totals) in a economy. |
| Positive Statements | Are factual statements that state what was or is and can be confirmed or denied by the analysis of facts. |
| Normative Statements | These statements go beyond the facts and state what ought to happen (value judgements). The economist is giving us an opinion on this beliefs. |
Created by:
deborahh
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