Edexcel Economics Theme 1.1

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What is a Social Science?
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Terms in this set (35)
What is a Social Science?
A study of human behaviour and interaction
What is an Economic Model?
An Economic theory or collection of theories which allows us to simulate situations. They are simplified versions of the world
Why do Economists use Models?
To simplify the world around us
What does ceteris paribus mean?
All else equal
Why is it difficult for Economists conduct scientific experiments?
Humans are unpredictable and varied and exist in complex environments which might affect their behaviour
What is a positive statement?
An assertion that is objective and testable (although not necessarily true)
What is a normative statement?
An opinion which is subjective and contains value judgements
Which 3 questions does the study of economics seek to answer?
What to produce? How to produce? For whom to produce?
What does 'scarcity' mean?
A limited, finite amount
What is meant by a 'renewable resource'?
A resource for which the stock level can be replenished naturally over time
What is meant by a 'non-renewable resource'?A resource for which the stock level cannot be replenished naturally over timeWhat is the Economic Problem?Infinite wants and limited resourcesWhat are the 4 factors of production?Land, labour, capital, enterpriseWhat is the reward for enterprise?profitWhat is the reward for Capital?interestWhat is the reward for Land?rentWhat is the reward for Labour?wagesWhy do opportunity costs exist?Scarcity. Since we cannot have everything, we must make decisionsGive an example of an opportunity cost for a consumerWhen buying a new TV, the consumer foregoes spending that money on a smartwatchGive an example of an opportunity cost for a firmBy spending £1000 on a marketing campaign, the firm forgoes the benefits of spending that money on capital investmentGive an example of an opportunity cost for a GovernmentBy spending on NHS, the government foregoes the benefits of spending that money on educationWhat is a Production Possibility Frontier/Curve?A diagram showing the maximum combination of two goods or services which can be produced if all resources are used efficiently for a given level of technologyIllustrate a point on the PPF at which the productive potential of the economy is maximisedPoint on curveIllustrate a point on the PPF which is unattainable at the current level of technologyPoint outside the curve (to the right/above)Illustrate a point on the PPF where the allocation of resources is efficientCan't show!Illustrate a point on the PPF where the allocation of resources is inefficientPoint inside the curve (to the left, below)Illustrate actual economic growth on a PPF diagramMoving from a point inside the curve to a point closer on the curveIllustrate potential economic growth on a PPF diagramCurve expands outwardsExplain 2 causes of an outward shift in the PPFfinding resources, immigration, investment in capitalExplain 2 causes of an inward shift in the PPFResource depletion (eg natural disaster, war) or resource depreciation (skills atrophy after long-term unemployment, lack of investment)Illustrate opportunity cost on a PPFWhen you move up one axis, you move down the otherWhatis the difference between consumer goods and capital goods?Consumer goods provide utility directly, capital goods do notWhat is the difference between actual and potential growth?Actual growth is an increase in output, potential growth is an increase in productive capacityExplain why we would not want 100% of our production to be on capital goodsWe would have no consumption (and therefore utility) right nowExplain why we would not want 100% of our production to be on consumer goodsWe would forego consumer goods (and their utility) in the future