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    Economic Methodology and The Economic Problem

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    Christine
    The document defines key economic terms related to microeconomics and the fundamental economic problem. It explains concepts like allocative efficiency, opportunity cost, production possibility frontier, and scarcity which are important to understanding how economies allocate scarce resources. Consumer and producer goods as well as the four factors of production - land, labor, capital and enterprise - are also defined. The fundamental economic problem is outlined as how to best allocate limited resources to maximize overall welfare.

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    Economic Methodology and The Economic Problem

    Uploaded by

    Christine
    38 views2 pages
    The document defines key economic terms related to microeconomics and the fundamental economic problem. It explains concepts like allocative efficiency, opportunity cost, production possibility frontier, and scarcity which are important to understanding how economies allocate scarce resources. Consumer and producer goods as well as the four factors of production - land, labor, capital and enterprise - are also defined. The fundamental economic problem is outlined as how to best allocate limited resources to maximize overall welfare.

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    1. Economic methodology and the economic problem

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    The document defines key economic terms related to microeconomics and the fundamental economic problem. It explains concepts like allocative efficiency, opportunity cost, production possibility frontier, and scarcity which are important to understanding how economies allocate scarce resources. Consumer and producer goods as well as the four factors of production - land, labor, capital and enterprise - are also defined. The fundamental economic problem is outlined as how to best allocate limited resources to maximize overall welfare.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    38 views2 pages

    Economic Methodology and The Economic Problem

    Uploaded by

    Christine
    The document defines key economic terms related to microeconomics and the fundamental economic problem. It explains concepts like allocative efficiency, opportunity cost, production possibility frontier, and scarcity which are important to understanding how economies allocate scarce resources. Consumer and producer goods as well as the four factors of production - land, labor, capital and enterprise - are also defined. The fundamental economic problem is outlined as how to best allocate limited resources to maximize overall welfare.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
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    Definitions and Concepts for AQA Economics AS-level

    Paper 1: Microeconomics

    Topic 1 - Economic Methodology and the


    Economic Problem

    Allocative efficiency: ​When economic resources are utilised to produce the combination of
    goods and services that maximise economic welfare.

    Allocative price function:​ ​Prices allocate resources away from markets with excess supply
    to markets with excess demand.

    Capital/producer goods:​ ​Goods used in the production of other goods.

    Choice: ​Selecting one of multiple alternatives when deciding how to allocate scarce
    resources.

    Consumer good:​ ​Goods consumed by households & individuals, used to satisfy needs and
    wants.

    Economic welfare: ​The economic satisfaction/wellbeing of individuals/households/groups in


    an economy.

    Factors of production: ​Inputs of the production process, such as land, labour, capital and
    enterprise.

    Finite resource: ​Non-renewable resource that becomes increasingly scarce.

    Fundamental economic problem:​ ​Deciding how to best allocate scarce resources to


    maximise overall economic welfare.

    Imperfect information:​ ​When individuals lack the information to make the best decision.

    Incentive price function: ​Prices create incentives for people to adjust their economic
    transactions.

    Need: ​Something necessary for human survival, e.g. food, shelter.

    Normative statement: ​Statements including value judgements, that cannot be easily


    proved/disproved.

    This work by PMT Education is licensed under https://bit.ly/pmt-cc


    https://bit.ly/pmt-edu-cc CC BY-NC-ND 4.0

    https://bit.ly/pmt-cc
    https://bit.ly/pmt-edu https://bit.ly/pmt-cc
    Opportunity cost:​ ​Loss of other alternatives due to selecting one of a set of options.

    Positive statement:​ ​Statements including facts, that can easily be proved/disproved.

    Production possibility frontier: ​A curve displaying the various possible combinations of two
    products that can be produced with finite resources.

    Rationing price function:​ ​Prices rise to ration demand for goods.

    Renewable resource:​ ​Restorable resource that can be replenished.

    Scarcity: ​Resulting from the concept of infinite wants and needs, yet limited resources.

    Signalling price function:​ ​Prices provide information to sellers and buyers, influencing
    economic decisions.

    Trade:​ ​Buying and selling of goods and services.

    Want: ​Something desirable, yet not necessary for human survival.

    https://bit.ly/pmt-cc
    https://bit.ly/pmt-edu https://bit.ly/pmt-cc

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