Level 1

The foundations of economics


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Social Science
A study of people's interactions in society
Economics
A social science on how to use scarce resources to satisfy infinite needs and wants
Scarce Resources
There are not enough resources to satisfy everything we want
Goods
Tangible Product
Services
Intangible Product
Economic Goods
Goods that are scarce in relation to demand
Free Goods
Goods that appear naturally and abundantly
Needs
A product we need to the state of deprivation, necessity for survival
Wants
A product that we have a specific desire and which we are craving for
Opportunity cost
The next best alternative forgone when an economic decision is made
Land, Labour, Capital, Entrepreneurship
The four resources that allow an economy to produce its output
Production Possibilities Frontier
A graph showing the maximum combination of goods and services that can be produced by an economy
Utility
A measure of usefulness and pleasure
Positive economics
A statement that may be proven to be right or wrong by looking at the facts
Normative economics
A statement that deals with areas of the subject that are open to personal opinion and belief
Planned Economy
Economic decisions are made by the government
Free Market Economy
Economic decisions are made by private firms
Merit Goods
Goods that are good for people
Demerit Goods
Goods that are bad for people
Economic Growth
Increase in national income
Economic Development
Measure of Welfare, a state of well being
Level 2