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Introd to Economics

TermDefinition
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