2. How is Economics - Makes use of models and theories to explain choices
a social science? - However, these models are often criticised for not
being realistic, as the world is complex
3. What are models Assumptions; this simplifies analysis and allows links
based on? between one variable and another
4. Define "assump- Initial or prior conditions before analysis, used to simplify
tions" ideas and economic relationships
5. How do Econ- Ceteris Paribus: All other influencing factors are held
omists use as- constant
sumptions? e.g. An increase in real income leads to an increase in
demand, Ceteris Paribus
6. How do Econo- "Neo classical" economists make a number of key as-
mists tackle com- sumptions:
plex interactions? 1) Individuals act rationally
2) People (e.g. workers, business owners) aim to max-
imise their utility
3) Individuals act independently of one another
4) Information used to make decisions is accurate and
complete
7. What are positive - Statements that are objective and can be tested,
statements? amended or rejected based on available evidence
- This is what positive economics deals with; Objective
explanations and the testing and rejection of theories
8. What are norma- - Normative statements are subjective (influenced by
tive statements? personal belief) i.e. carry value judgements
9. Define "value Evaluative statments of how good or bad you think an
judgements" and idea is e.g. a government thinks universal healthcare is
give an example a good idea, so implements a national health service
10.
, Micro-Economics AQA A-Level
Study online at https://quizlet.com/_fjdtjn
4.1.1.2 THE NA- 4.1.1.2 THE NATURE AND PURPOSE OF ECONOMIC
TURE AND PUR- ACTIVITY
POSE OF ECO-
NOMIC ACTIVITY
11. What is the central The production of goods and services to satisfy needs
purpose of eco- and wants
nomic activity?
12. What are needs Needs = Things you need to live
and wants? Wants = Something you would like to have but not
essential for survival
13. What are the three 1) What goods and services to produce
key economic de- - In a market economy, businessees are directed by
cisions? consumer demands
2) How to best produce goods and services?
- For businesses, this will be decided on what's most
cost effective
3) Who is to recieve goods/services
- In a market economy, this is decided by who has the
necessary disposable income
- However, there can government intervention
15. What are the fac- Capital: Man made aids to production
tors of produc- Enterprise: Individuals/groups who organise the factors
tion? of production and take risks in order to gain a profit
Land: Natural resources available for production
Labour: The quality and quantity of human output
16. What is automa- A production technique that uses capital machinery /
tion? technology to replace or enhance human labour.
17. What is Capi- Replacing labour e.g. amazon warehouses
tal-Labour substi-
tution
, Micro-Economics AQA A-Level
Study online at https://quizlet.com/_fjdtjn
18. Renewable vs Non-Renewable:
Non-Renewable - Finite in supply
resources - Rate of replacement is much slower than rate of ex-
traction
- Rate of extraction dpends on the current market price
Renewable:
- Finite
- Rate of replacment is much higher than the rate of
extraction
19. 4.1.1.4 SCARCITY 4.1.1.4 SCARCITY CHOICE AND THE ALLOCATION
CHOICE AND THE OF RESOURCES
ALLOCATION OF
RESOURCES
20. What is the basic Infinite wants and finite resources
economic prob-
lem?
21. What do we have All consumers, businesses and government have to
to do because of make choices about where to allocate resources
scarcity?
22. What technlogies emerging technologies such as the freely-available in-
changed our opin- ternet, and services such as google and other social
ions on scarcity? medias.
23. What is opportuni- The benefits of the next best alternative sacrificed when
ty cost? making a choice
24. List some exam- Work-leisure: Choosing leisure over work leads to an
ples of opportuni- opportunity cost of wages
ty cost Government spending: More spent on one public ser-
vice means less spent on another
Investing (businesses): The opportunity cost of investing
in capital is less immediate production
Scarce farming land: By having space for grazing or
biofuel, there is an opportunity cost of farming
25.
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