Nature Of Economics 1.1

Front 1

Ceteris Paribus

Back 1

All other variables remain constant, it allows economists to simplify and explain causes and effects.

Front 2

Positive Statement

Back 2

A statement that attempts to assess an objective reality without making a value judgment.

Front 3

Normative Statement

Back 3

A statement that contains a value judgement and are based on personal beliefs rather than objective fact.

Front 4

The Basic Economic Problem

Back 4

How to allocate infinite wants and needs with only finite resources.

Front 5

A Free Market Economy

Back 5

An economy with little government interventionn or regulation. Buyers and sellers arrive at prices based on supply and demand.

Front 6

A Command Economy

Back 6

The government determines what is produced, how it is produced and how it is distributed. The government employs all workers and unilaterally determines their wages

Front 7

Production possibility frontiers

Back 7

A curve that illustrates the possible quantities that can be produced of two products if both depend on the same finite resource. It shows the maximum possible output of an economy.

Front 8

Specialisation

Back 8

The process wherein a company or individual decides to focus their labour on a specific type of production. This increases the quality of their labour however can lead to an inflexible workforce

Front 9

Division of labour

Back 9

The seperation of tasks in a production process, workers are assigned smaller and more manageable tasks that contribute to a larger overall activity.

Front 10

The four function of money.

Back 10

A medium of exchange, a measure of value , a store of value, a method of deferred payment.

Front 11

Mixed Economy

Back 11

A blend of the free market and planned economy as individuals, firms and the government own factors of production and distribute goods/services.