Usuario
The scientific study of societies and social interaction (the scientific study of people)
All other variables being held constant
There being many different factors that can change within a model/ experiment. Economists therefore use the ‘ceteris paribus’ assumption.
Assumptions provide a way for economists to simplify economic processes and make them easier to study and understand.
A statement that is objective and fact-based and can be tested using evidence to determine whether it is true or false
A statement that is based on value judgement or opinion and cannot be tested
Economic problem (Problem of Scarcity) – the idea that we (individuals, households, firms, Governments) have infinite wants but scarce resources
Renewable resources can be naturally replenished over time, while non-renewable resources are finite and cannot be replaced once depleted
Renewable resources
Non-renewable resources
Capital
Enterprise
Land
Labour
Manufactured item used to aid production
Individual or business who take the initiative to set up a business and employ different factors of production
Physical space and the natural resources in it
Human workers who are involved in producing the good
Money cannot be used to produce anything, it can be used to buy factors of production and those factors are used to make things.
The concept of Opportunity Cost helps us to choose the best possible option among all the available options.
It helps us to use every possible resource tactfully, efficiently and hence, maximise economic profits.